Best Buy Going Mobile as Profit Declines Slightly2 Apr, 2008 By: Erik Gruenwedel
Despite a 2.2% same-store (open at least 12 months) increase in entertainment software sales, Best Buy Co. Inc. reported fourth-quarter (ended March 1) income of $737 million — down 3.5% from $763 million during the same period the year prior.
Entertainment revenue, which comprised 21% of total sales, compared to 20% the previous year, was driven by double-digit comp store gains in video games and hardware. Gains were partially offset by undisclosed declines in DVD and music CD sales.
Entertainment software comp sales increased 8.9% during the same period the year prior.
In an investor call, Brian Dunn, president and COO of Best Buy, said the company would continue to ramp up distribution of its mobile phone service, which analysts say represents 2% of the market.
The mobile-phone division is currently available in 181 stores with plans to expand nationwide, including 300 Apple store locations, in the next 18 months.
Dunn envisions the mobile market as an investment in the future of telecommunications and entertainment distribution.
“If you are still not sure what the connected world is, pay attention the next time you land in an airplane,” Dunn said. “The instant the wheels hit the ground, it seems more than half of the people in the cabin are powering up handheld technology and connecting.”
The Minneapolis-based No. 1 consumer electronics retailer reported revenue of $13.4 billion, compared to $12.9 billion the previous year when the quarter included an additional week.
For the fiscal year, profit topped $1.4 billion on revenue of $40 billion, compared to income of $1.37 billion and revenue of nearly $36 billion the previous year.
The company opened 98 new stores in the United States during the fiscal year. Online revenue increased 25%, breaking the $1 billion mark.
In addition to Best Buy stores, U.S. properties include Best Buy Mobile, Geek Squad, Magnolia Audio Video, Pacific Sales and Speakeasy.