DVD, Games Buoy Best Buy7 Sep, 2001 By: Joan Villa
Best Buy reported that strong sales in DVD, games and consumer electronics will compensate for shortfalls in music and computers, leading to second-quarter earnings that will handily beat Wall Street estimates by more than 8 cents per share. DVD hardware and software,wireless communications, digital televisions, and digital cameras and camcorders led sales increases for the quarter ended Sept. 1.
A 31% boost in total sales to $4.17 billion from last year’ssecond quarter includes revenues from 66 new Best Buy locations and Musicland and Magnolia Hi-Fi acquisitions in fiscal 2001 that were notreported in the year-ago period.
For Best Buy stores alone, entertainment software, including DVD and games, posted the largest gains as a percentage of total revenue. The category jumped 3 points to 19% of sales, leading Best Buy locations open at least 14 months to comparable sales gains of 2.8% for the quarter. The results show that PlayStation 2 and Nintendo Gameboy Advance were “very well-received with consumers,” notes analyst Shelly Hale with Banc of America Securities.
Consumer electronics also grew to 32% of the chain’s overall revenue in the second quarter, from 31% a year ago, while home office and appliances both lost ground.
Taken alone, Musicland’s sales dropped 1% in the second quarter and same-store sales declined four-tenths of a point. VHS movie salescontinued to decline as part of “a planned product transition,” while sales of DVD movies increased significantly to again offset “modestly negative” music sales, executives said.
Best Buy expects earnings to be at least 38 cents per share, compared to the 30 cents predicted by analysts polled by First Call. Best Buy will report full second quarter earnings results Sept. 18. The company’sstock closed up $1.57 at $60.29 on the earnings announcement Sept. 6.