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Best Buy Reports 24% 1Q Earnings Slide

19 Jun, 2001 By: Hive News

Best Buy Co. Inc., the No. 1consumer electronics retailer,reported a 24% first-quarter earnings decline for Best Buy Co. Inc., citing slowing economy and continued weakness in sales of desktop computers.

Best Buy said Tuesday that it earned $55 million, or 26 cents a share, in the quarter ended June 2, compared with $72 million, or 34 cents a share, a year earlier - before the company's purchase of Musicland Inc.

Including the Musicland data in the 2000 quarter for comparison, Best Buy earnings dropped 15% from $65 million, or 31 cents a share.

The inclusion of results from Musicland, where sales are normally slower in the first half of the year, reduced earnings by about 6 cents a share, Best Buy said.

First-quarter sales were up nearly 10% to $3.70 billion, from $3.37 billion for Best Buy and Musicland combined in the first quarter of 2000. The sales increase reflects the addition of 69 stores inthe past year, bringing Best Buy's store total to 430, as well as the inclusion of 1,300 Musicland stores, including Sam Goody, Media Play, On Cue and Suncoast.

Same-store sales at Best Buy stores dropped just over 3%.Same-store sales for Musicland declined about 6%.

"We had expected earnings to decline in a decelerating economy," said Richard Schulze, Best Buy chairman and c.e.o. "Both Best Buy and Musicland produced bottom-line results that were ahead of plan. I remain confident that we are on track to deliver earnings growth of 16 to 18% this year."

Still, reported the Associated Press, executives told analysts in a conference call Tuesday morning that sales are expected to be sluggish in the second quarter, with strength in digital products and wireless communications, such as cell phones, tempered by a weak economy and softness in desktop computers.

The company projects same-store sales to be up no more than 1% in the second quarter, increase to 1 to 3% in the third quarter and rise to 4 to 6% in the fourth quarter, said the AP.

Allen Lenzmeier, president of Best Buy retail stores, told analysts that he believes that the company is "gaining market share" in a host of digital products, including digital cameras.

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