BEST BUY Q1 EARNINGS EXCEED WALL STREET EXPECTATIONS

Best Buy today (6/19) reported first-quarter net earnings of $55 million, or 26 cents per diluted share, compared with $72 million, or 34 cents per diluted share, for the same period a year ago.

"We had expected earnings to decline in a decelerating economy," said Richard M. Schulze, Best Buy founder, Chairman, CEO and utility infielder. "Overall, our earnings exceeded Wall Street's expectations. 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 16-18% this year."

The company attributed the earnings decline to modest comparable store sales declines, which were partially offset by improved gross profit margins—whatever that means. The inclusion of Musicland's financial results, which are seasonally slower in the first half of the year, reduced earnings by approximately 6 cents per share, slightly better than management's expectations.

Total sales for the first quarter increased 25% to $3.697 billion from $2.964 billion a year ago. The sales increase reflected the addition of 69 Best Buy stores in the past 12 months, which brought the total to 430 stores, as well as the inclusion of sales from approximately 1,300 Musicland stores.

"I am encouraged by our strengthening sales trend at the end of the quarter," Schulze added. "We are well positioned to take advantage of the expansion of the digital product cycle and gaming trends, particularly as the economy improves."

And if that ain’t enough numbers for you, here’s a few more:

Gross profit margins for Best Buy were 22.9% of sales in the quarter, up 2.5% of sales compared with last year's first quarter. Selling, general and administrative expenses—the ol’ SG&A—rose to 20.4% of sales for the quarter versus 16.8% of sales in the first quarter of fiscal 2001. Total operating income was 2.4% of sales for the quarter, compared with 3.7% in the first quarter last year. Net interest income was $1 million in the first quarter compared with $8 million for the same period last year.

During the first quarter, Best Buy opened 11 new stores, and Musicland closed a net of five stores. The company remains on track to open approximately 60 Best Buy stores, approximately 30 On Cue stores and two Magnolia Hi-Fi stores in the current fiscal year.