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Best Buy tops estimates
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September 18, 2001: 10:32 a.m. ET
Electronics chain posts 2Q earnings gain on higher digital sales
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NEW YORK (CNNfn) - Consumer electronics retailer Best Buy Inc. reported higher fiscal second-quarter earnings Tuesday, a penny ahead of Wall Street expectations, on strong sales of high-margin items such as DVD players and other digital products.
For the quarter ended Sept. 1, Best Buy (BBY: up $1.67 to $49.67, Research, Estimates) posted earnings of $85 million, or 39 cents a share, up from $77 million, or 36 cents a share, a year earlier. Analysts on average anticipated a profit of 38 cents a share, according to earnings tracker First Call.
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 CEO Richard Schulze talks with CNNfn about 2Q earnings and sales. |
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Second-quarter sales rose 31 percent to $4.2 billion from $3.2 billion. The company attributed much of the sales gain to the addition of 66 stores in the past 12 months as well as sales from the Musicland group.
Though electronics retailers have been struggling with the economic slowdown in addition to slackening demand for personal computers, Best Buy has been able to maintain margins and capture market share from rivals such as Circuit City (CC: up $0.21 to $10.46, Research, Estimates) with its product mix and competitive prices.
"The combination of stronger-than-expected consumer interest, a more profitable sales mix and tight controls on spending drove our earnings well-above expectations," CEO Richard Schulze said in a statement.
The company also reported above-plan sales at Musicland, the troubled retail chain that Best Buy acquired earlier this year.
Best Buy said sales in the entertainment software and consumer electronics product categories increased faster than sales in the home office category, which is principally made up of lower-margin personal computers.
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Selling and general administrative expenses increased to 19.2 percent of sales in the quarter compared with 16.8 percent in the year-earlier quarter, primarily reflecting the addition of Musicland, the company said.
However, following last Tuesday's terrorist attack that destroyed the World Trade Center in New York and part of the Pentagon near Washington, D.C., analysts and retailers are unsure just how the consumer will react in the coming weeks.
Two retail reports out Tuesday indicate early September were lower as a direct result of the attacks, but bounced back to levels before the attack by the weekend. 
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Best Buy
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