Best Buy Sales Jump, Outlook Disappoints

MINNEAPOLIS – Best Buy Co. Inc. (BBY) said sales jumped 10 percent for December, with comparable-store sales rising 2.5 percent on a surge of holiday buying of digital music players, cameras and televisions.

However, the nation's largest consumer electronics retailer said the comparable-store sales gain for the quarter would be at the low end of the 3 percent to 5 percent it forecast at the beginning of December.

The results came one day after rival Circuit City Stores Inc. (CC) reported a 1.8 percent December sales increase, with same-store sales dropping 5.8 percent.

Best Buy shares dropped $2.55, or 4.4 percent, to close at $55.50 Thursday on the New York Stock Exchange (search).

Best Buy said sales increased to $5.1 billion for the month ending Jan. 1, 2005, versus $4.6 billion for the month ended Jan. 3, 2004. It said the revenue increase was driven by the 79 new stores it added in the past year.

Chief executive Brad Anderson said in a statement that Best Buy saw a "modest decline" in customer traffic during December, but those customers bought more than in the previous years.

"Overall, we believe we gained market share," he said.

The company measures same-store sales at stores open at least 14 months. At those stores, the company said sales of digital music players more than doubled, and said it saw sales growth in the double digits for digital televisions and in the mid-teens for laptop computers.

The company said it saw an expected decline in comparable-store sales for analog televisions, video gaming equipment, home audio products, compact disks, desktop computers and cell phones.

Best Buy reiterated fourth-quarter earnings of $1.56 to $1.66 per share, and said it expects to earn $2.80 to $2.90 per share for the full year, which ends Feb. 26. Analysts polled by Thomson First Call were expecting $1.61 for the quarter and $2.94 for the year.