News > Fortune 500

Profits up at Best Buy, Circuit City
Best Buy cites strong holiday demand for digital products; Circuit City announces two deals.
March 31, 2004: 3:12 PM EST

NEW YORK (CNN/Money) - Electronics retailers Best Buy and Circuit City posted higher fourth-quarter profits Wednesday on the back of strong holiday sales that were fueled by demand for digital products and flatscreen TVs.

Shares of both Best Buy and Circuit City rallied higher in afternoon trading on the New York Stock Exchange.

Minneapolis-based Best Buy, the No. 1 electronics retailer, logged a profit of $469 million, or $1.42 a share, for the quarter ended March 1, up from $378 million, or $1.16 a share, a year ago.


Analysts, on average, had expected the company to earn $1.39 a share for the period.

For its first quarter, Best Buy (BBY: Research, Estimates) said it expects to earn between 30 to 35 cents a share. The company earned 21 cents a share for the same period a year ago.

For its full year, the retailer said it expects earnings in the range of $2.80 to $2.93 per share.

Best Buy earlier this month said comparable sales -- or sales at stores open at least a year -- rose 9.7 percent in the fourth-quarter, capping off a pretty good year overall. Analysts say the concern going forward is the fact that Best Buy will be facing tough comparisons, particularly in the second-half of the year.

Best Buy CFO Darren Jackson, said in a statement that while sales comparisons will become more challenging, the company still expects to "see opportunities to gain share." "

Said Jackson, "In the first half of fiscal 2005, we expect strong comparable store sales gains, driven by increased customer loyalty, high brand awareness and outstanding execution in the stores. We are very optimistic about the year as a whole."

The retailer expects to open 73 new stores in its current fiscal year.

Circuit City's profit rise

Circuit City, the No. 2 electronics retailer, said fourth-quarter profits rose from a year ago, helped by lower operating costs and better-than-expected sales during the crucial holiday shopping period.

The Richmond, Va.-based retailer said earnings in the quarter ended Feb. 29 rose to $89.6 million, or 43 cents a share, from $70.9 million, or 34 cents a share, a year earlier.

Excluding discontinued operations, it earned 46 cents a share. Analysts, on average, had forecast a profit of 36 cents a share.

The stock traded higher Wednesday morning on the New York Stock Exchange.

Comparable sales for the quarter rose a slim 1 percent and grew 3 percent for the year.

Circuit City, which had steadily been losing market share to Best Buy, said it plans to open between 60 to 70 superstores in 2005. The company closed 19 of its stores in the fourth quarter.

Separately, the company announced two deals Wednesday. Circuit City (CC: Research, Estimates) said it was acquiring Ontario, Canada-based electronics retailer InterTan for approximately $284 million in cash. Circuit City said the deal also marks the retailer's first presence in the Canadian market. The retailer also said it expects the InterTan acquisition to add to its earnings in the current year.

Additionally, the retailer said it has agreed to buy online music seller MusicNow.  Top of page

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