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"We expect continued growth in revenues and earnings as we open new stores, leverage expertise across our brands and benefit from an improving economy."
——Richard Schulze, Best Buy Founder
BEST BUY EARNINGS UP 84%
Company Ends Banner Year Strongly
Best Buy Tuesday reported record net earnings of $350 million, or $1.62 per diluted share, for the quarter ended March 2, 2002, up 84% when compared to last year’s tally. For the period ended March 3, 2001, the company reported a net earnings of $190 million, or .89 cents per diluted share.

"An 84% increase in fourth-quarter earnings is a great way to conclude this banner year," said Best Buy Founder, Chairman/CEO Richard Schulze. "Our employees' focus on meeting customers' needs drove our results. Our Best Buy stores continued to post strong sales, while expanding margins and leveraging fixed costs. Our Musicland stores met our profitability targets despite reduced mall traffic, due to expense control and our remerchandising of Sam Goody stores. Also, our results at Future Shop have been significantly better than expected."

As reported on March 7, total sales for the fourth quarter increased 28% to $7 billion from $5.5 billion a year ago. The sales increase reflected the addition of 62 Best Buy stores in the past year, which brought the total to 481 stores, as well as the inclusion of a full quarter of sales from approximately 1,320 Musicland stores and the addition of sales from 95 Future Shop stores. Total sales were reduced approximately 5% due to the inclusion of one less week than was in the prior year's fourth quarter. Comparable store sales rose 4.5%.

"Our strong finish to the quarter and the year builds our optimism for the year ahead," Schulze added. "We expect continued growth in revenues and earnings as we open new stores, leverage expertise across our brands and benefit from an improving economy."

The gross profit margin rate for the company was 23% of sales in the quarter, up by 2.6% of sales compared with last year's fourth quarter. The inclusion of Musicland's results increased the Company's total gross profit margin by 1.2% of sales in the quarter. The balance of the gross profit margin improvement resulted from changes in product mix at Best Buy stores, including significant growth in sales of digital products and entertainment software, combined with lower markdowns, a stable promotional environment and reduced costs associated with financing offers.

Total operating income was 8.2%t of sales for the quarter, up by 2.8% of sales compared with last year's fourth-quarter rate, reflecting a higher gross profit rate as well as a lower SG&A rate.

For the fiscal year, the company's total sales rose 28% to $19.6 billion, driven by the addition of 62 Best Buy stores and the inclusion of Musicland's and Future Shop's results. Comparable store sales rose 1.9% percent, on top of a 4.9% increase last year, as strength in consumer electronics, movies and video gaming offset soft sales of desktop computers and prerecorded music. The gross profit margin rate in the fiscal year increased by 2.6% of sales, primarily due to favorable changes in product mix, lower markdowns and the inclusion of Musicland results, which boosted gross profit by 1.3% of sales.

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