retail

Cell Phones, Flat-Screens Boost Best Buy Sales

Flatscreentv/cellWhile Best Buy's earnings fell 23% in its fourth quarter, the company came in above Wall Street's expectations, as consumer demand picked up in January and February, and shoppers went wild for mobile phones and accessories.

For the fiscal fourth quarter, net income fell to $570 million from $737 million in the same period a year ago, while revenues gained 10% to $14.7 billion. (Excluding the effects of foreign currency and the impact of adding Best Buy Europe, total fiscal fourth-quarter revenue slipped 2%.)

And while comparable-store sales fell 4.9% for the quarter, executives at the Minneapolis-based retailer say they were cheered that sales eased just 2.5% in the combined January and February period, compared to the 6.8% decline it saw for December.

"We prepared for reduced consumer spending, and we were pleased when the quarter finished stronger than it began," the company says in its release of the results, adding that despite the tough environment, it boosted its market share 1.2 percentage points. (It helps that Circuit City, its main rival, filed for bankruptcy and liquidated during the quarter, as did Tweeter, a large regional competitor.)

By segment, the company saw a high demand for its notebook computers, with sales increasing in the low double digits. As a result, the home office revenue category, about 30% of total fourth-quarter revenue, gained 8.1% on a comparable-store basis. "Mobile phones and accessories experienced a nearly triple-digit comparable-store sales gain, reflecting significant market-share gains," it says.

And in its service category, including the Geek Squad, revenues also gained, with comparable store-sales climbing 2.2%. (That segment accounts for about 5% of fourth-quarter revenues.)

In all other segments, however, results weakened. Consumer electronics -- the company's largest segment, accounting for about 40% of revenues -- saw a decline of 8.6% in comparable-store sales. While flat-panel TV sales increased, sales of digital cameras, MP3 players and GPS devices all fell in the low double-digit range.

The entertainment and software sector -- which accounts for about 21% of fourth-quarter revenues -- dropped 11% on a same-store basis, including declines in its video game business. The steepest decline came in appliances, which account for 4% of total revenues: Comparable-store sales plunged 20.5%.

In the year ahead, the company expects more lean times, and is predicting that sales will be anywhere from flat to down 5% in the coming fiscal year. "We expect consumer spending to remain challenging in fiscal 2010," the company says in its release, "and the complex mix of external factors that will influence their behavior makes forecasting the future increasingly difficult."

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