Best Buy Reports Record Q1 Sales Increase of 25%; Musicland Comp-Store Sales Down 6.1%7 Jun, 2001 By: Hive News
Best Buy Co. Inc. on Thursday reported record sales for the company's fiscal 2002 first quarter, ended June 2, 2001.
Total sales rose 25% to $3.69 billion in the quarter compared with $2.96 billion inlast year's first quarter. The increase was fueled by Best Buy store openings over the past year, as well as the inclusion of sales fromapproximately 1,300 stores in the Musicland Group. The company opened 11 Best Buy stores in the current quarter and now operates 430 Best Buy stores, compared with a total of 361 stores one year ago.
"We believe that Best Buy gained market share because of our geographic expansion and because consumers continued to prefer ourstore format," said Brad Anderson, vice chairman, president and c.o.o. "Consumers continued to have an appetite for the digital products Best Buy sells, such as TVs, cameras and camcorders. Sales ofdigital products comprised 15% of Best Buy's sales, compared with 10% in the first quarter of fiscal 2001. Sales met our expectations forthe first quarter, and we anticipate that our earnings for the quarter will bein line with Wall Street's estimates as well."
The current consensus estimate for the company's first-quarter dilutedearnings per share is 23 cents per share, according to First Call. The company plans to release first-quarter earnings prior to the market opening on Tuesday, June 19.
As expected, Best Buy comparable store salesdeclined by 3.1%, driven by a reduction in demand for personal desktop computers, although sales of digital technology products continuedto grow. Best Buy store sales mix, by major product category, was:
Home Office 33% 35%
Electronics 32% 31%
Software 19% 18%
Appliances 8% 8%
Other 8% 8%
Entertainment software sales showed the strongest comparable store gains, benefiting from strength in sales of DVD software and video games, reports the company.
Consumer electronics sales, spurred by digital products, increased modestly. The home office category declined in the sales mix due to reduced sales of personal computers, which the company attributed to the market saturation of home computers as well as the anticipation of Microsoft's new operating platform, Microsoft XP, this fall.
Musicland comparable store sales declined by 6.1%, which was more than the company expected, reflecting soft sales of prerecorded music, which were partially offset by significant strength in sales of DVD software. Musicland stores principally sell prerecorded music and movies.
The company says it is testing the introduction of new products, including devices that play music and movies as well as gaming hardware and software, atSam Goody stores. Musicland operates approximately 80 Media Play superstores, 200 rural On Cue superstores, 630 Sam Goody mall-based music stores and 390 Suncoast mall-based video stores.
Through its acquisition of Magnolia Hi-Fi, the company also operates 13 high-end electronics stores in the Pacific Northwest. Sales at Magnolia Hi-Fi stores in the first quarter were essentially flat compared with the prior year's first quarter despite the addition of two stores, reflecting reduced store traffic due to a slowdown among regional technology companies. Sales of high-definition projection TVs and plasma TVs continued to increase.
The year-over-year change in total company sales reflects the acquisitions of Musicland and Magnolia Hi-Fi stores in the fourth quarter offiscal 2001.
The total company comparable store sales figure represents only Best Buy stores open at least 14 months. The company plans to include Musicland and Magnolia Hi-Fi sales in this figure beginning with the first quarter of fiscal 2003.