Best Buy profit drops 3.4% but beats analyst forecasts
Best Buy Co. said Wednesday that fourth-quarter profit fell less than analysts estimated on higher sales of more-expensive laptops and video game consoles.
The chain forecast that sales and profit this year would rise more than some analysts projected. Shares of Best Buy rose 1.1% on the news.
“Apparently the consumer still wants to spend on electronics,” said Jon Fisher, a Minneapolis-based portfolio manager at Fifth Third Asset Management. “Best Buy has done a lot to offer more products and to make their stores more than a place to go to buy a flat-panel TV.”
Chief Executive Brad Anderson is adapting store content and layouts to predominant customer types in each locale, catering more to tech geeks at one outlet and to families with kids at another. Those shifts are helping the retailer draw shoppers who otherwise are curbing non-essential spending as gas prices and food costs rise.
Higher sales of flat-panel televisions and global-positioning systems, as well as a net 137 new stores, helped offset declining revenue from tube TVs, MP3 players and DVDs in the fourth quarter, the Richfield, Minn.-based company said.
Best Buy plans to set up a new mobile-phone department model, with a wider selection of devices and wireless plans, at all of its U.S. stores in the next 18 months. About 180 stores have the expanded section now.
Net income dropped 3.4% to $737 million, or $1.71 a share, in the three months ended March 1, the retailer said. Analysts estimated profit of $1.65 a share, on average.
Sales rose 4% to $13.4 billion, the smallest gain in at least nine years.
Best Buy said sales for the fiscal year would be $43 billion to $44 billion, with profit of $3.25 to $3.40 a share.
Analysts surveyed by Bloomberg estimated profit of $3.31, on average, on sales of $43 billion.
The forecast is a bright spot in the industry as retailers led by J.C. Penney Co. cut earnings forecasts, citing slower consumer spending.
Best Buy shares rose 47 cents to $43.94.
