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Best Buy Posts 85% Surge in Earnings

Quarterly sales jump 12% at the electronics retailer. It raises its guidance for fiscal 2006.

June 15, 2005|From Associated Press

MINNEAPOLIS — Fiscal first-quarter profit at Best Buy Co. leaped 85%, and the nation's largest consumer electronics retailer raised its guidance for the entire year.

Best Buy's shares rose $8.68 to $67.80, surpassing the previous 52-week high of $62.20.

The company said Tuesday that sales of high-end televisions rose at double-digit percentage rates, and sales of digital music players more than doubled from the same quarter last year. Television prices dropped less than Best Buy expected, but it made up for the decline by selling more of them. The company also said it needed fewer promotions to sell its gadgets.

"It was one of those times [when] it's fun to be in business," Chief Executive Brad Anderson said.

Best Buy raised its projection for its fiscal 2006 earnings by 15 cents a share to $3.10 to $3.25.

First-quarter profit jumped to $170 million, or 51 cents a share, from $92 million, or 28 cents, a year earlier. On average, analysts polled by Thomson First Call expected earnings of 30 cents a share.

First-quarter revenue totaled $6.12 billion, up 12% from $5.48 billion a year earlier and well ahead of the $5.98 billion in sales expected by analysts.

Anderson said profit was driven by better-than-expected revenue growth and gross-profit margin, a lower tax rate and strong results from stores converted to focus on specific customer groups, such as suburban housewives or small-business owners.

Best Buy said revenue from movies and music declined, while video games grew solidly, driven by the launch of Sony Corp.'s PlayStation Portable.

Richfield, Minn.-based Best Buy said it expected to earn 51 cents to 56 cents a share during the second quarter.

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