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Best Buy First-Quarter Revenue from Continuing Operations Increases 11% to $4.67 Billion.



Business Editors

MINNEAPOLIS--(BUSINESS WIRE)--June 5, 2003

Best Buy Co., Inc. (NYSE NYSE

See: New York Stock Exchange
:BBY BBY Best Buy (stock symbol)
BBY Before Battle of Yavin (Star Wars)
BBY BeBeyond (Chinese online community) 
):

Company expects first-quarter earnings of 19 to 21 cents per

diluted di·lute  
tr.v. di·lut·ed, di·lut·ing, di·lutes
1. To make thinner or less concentrated by adding a liquid such as water.

2. To lessen the force, strength, purity, or brilliance of, especially by admixture.
 share from continuing operations continuing operations

Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the
, compared

to analysts' consensus of 17 cents


                     First-Quarter Revenue Summary
                      (U.S. dollars in billions)
----------------------------------------------------------------------
                                             Revenue  Comparable Store
                                   Revenue    Gain       Sales Gain(1)
------------------------------------------- --------- ----------------
Continuing Operations(2)             $4.67        11%             2.2%
------------------------------------------- --------- ----------------
  Domestic                           $4.28        10%             2.3%
------------------------------------------- --------- ----------------
  International                      $0.39        28%             0.0%
----------------------------------------------------------------------

(1) Includes revenue at stores and Internet sites operating for at
    least 14 full months, as well as remodeled and expanded locations.
    Relocated stores are excluded from the comparable store sales
    calculation until at least 14 full months after reopening. The
    calculation of the Comparable Store Sales Change excludes
    Musicland revenue, which is included in discontinued operations.

(2) Excludes Musicland revenue, which has been classified as
    discontinued operations for all periods presented.


Best Buy Co., Inc. (NYSE:BBY) today reported that revenue from continuing operations rose 11 percent to $4.67 billion for the fiscal quarter ended May 31, 2003, compared with $4.20 billion for the Company's fiscal 2003 first quarter. The increase was driven by the addition of 79 stores in the past 12 months as well as a comparable store sales gain of 2.2 percent, which was a stronger performance than anticipated. Driving the comparable store sales gains were customer traffic increases at the stores and improvements in BestBuy.com's traffic levels and conversion rate, which is the percentage of visitors who make a purchase.

"Our sales rebounded nicely in April and May, driven by a swift conclusion to the war in Iraq and a gradual recovery in consumer confidence. Comparable store sales gains benefited from the compelling offers we presented to our customers, including free shipping on purchases from BestBuy.com," said Brad Anderson Anderson, river, Canada
Anderson, river, c.465 mi (750 km) long, rising in several lakes in N central Northwest Territories, Canada. It meanders north and west before receiving the Carnwath River and flowing north to Liverpool Bay, an arm of the Arctic
, vice chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board.  of Best Buy. "We believe we gained market share in several key categories in the fiscal first quarter. We anticipate earnings per share from continuing operations for the first quarter to be at the high end of our previously projected range."

Segment Results

Comparable store sales for the Company's domestic segment, which includes U.S. Best Buy stores and Magnolia Magnolia, city, United States
Magnolia (măgnō`lyə), city (1990 pop. 11,151), seat of Columbia co., SW Ark.; inc. 1855. Its oil industry has been important since 1938.
 Hi-Fi stores, rose 2.3 percent, reflecting U.S. Best Buy comparable store sales gains. The fastest-growing product categories were digital televisions, digital cameras, digital camcorders, notebook computers A laptop computer that weighs in a range from five to seven pounds. The term originated when laptops were routinely more than 10 pounds, and those that became lighter were placed in a special "notebook" category. In practice, notebook computer and laptop computer are synonymous.  and computer peripherals. Sales of cellular telephones also showed gains, driven by new products with enhanced features. Also, consumers purchased more merchandise through the Company's Web site, BestBuy.com. These gains were offset in part by declining sales of desktop computers as consumers migrate to mobile computing Using a computing device while in transit. Mobile computing implies wireless transmission, but wireless transmission does not necessarily imply mobile computing. Fixed wireless applications use satellites, radio systems and lasers to transmit between permanent objects such as buildings , in addition to continued weakness in sales of audio products and appliances. Domestic revenue from continuing operations totaled $4.28 billion in the first quarter of fiscal 2004. The 10-percent gain in revenue over that of the same period of the previous year included the addition of 59 new U.S. Best Buy stores and three Magnolia Hi-Fi stores in the past 12 months. Magnolia Hi-Fi revenue for the first quarter totaled approximately $30 million, an increase of 31 percent. Magnolia Hi-Fi's comparable store sales declined 0.4 percent.

For the international segment, which is comprised of Future Shop stores and Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma.  Best Buy stores, comparable store sales were even compared with the prior year's first quarter, impacted by the opening of new Best Buy and Future Shop stores in major markets. (Note: The international segment's fiscal 2003 figure is calculated as if Future Shop had been acquired at the beginning of fiscal 2002.) Sales of digital cameras, digital televisions and entertainment software showed strength in the quarter, offset by revenue declines in the home office product category. Comparable store sales growth also benefited from revenue gains at the FutureShop.ca Web site, driven by compelling offers, including free shipping. International first-quarter revenue totaled approximately $390 million, an increase of 28 percent compared with the prior year's first quarter. The gain reflected the addition of seven new Future Shop stores and 10 new Canadian New Canadian
Noun

Canad a recent immigrant to Canada
 Best Buy stores in the past 12 months.

Consumer Electronics, Home Office Categories Increase in Mix

The Company's revenue mix for continuing operations, by major product category, is shown below.


----------------------------------------------------------------------
                     Product Revenue Mix Summary -
                         Continuing Operations
----------------------------------------------------------------------
                                       First Quarter Ended
Product Category           -------------------------------------------
                                                           6/1/02
                                          6/1/02           before
                              5/31/03  Reclassified   reclassification
-------------------------------------- ------------ ------------------
Consumer Electronics               37%          36%                33%
-------------------------------------- ------------ ------------------
Home Office                        37%          36%                32%
-------------------------------------- ------------ ------------------
Entertainment Software             20%          21%                20%
-------------------------------------- ------------ ------------------
Appliances                          6%           7%                 7%
-------------------------------------- ------------ ------------------
Other                              --           --                  8%
-------------------------------------- ------------ ------------------
TOTAL                             100%         100%               100%
----------------------------------------------------------------------


As of the beginning of fiscal 2004, the Company has reclassified the revenue from "Other" to the appropriate product categories to provide more clarity on the revenue mix. The Other category included performance service plans, blank digital media, furniture, storage, business cases and batteries.

Consumer electronics revenue increased in the mix for the first quarter of fiscal 2004, compared with the prior year's first quarter, reflecting strength in sales of digital televisions, digital cameras and digital camcorders. Revenue from home office products also increased in the mix for the quarter due to strong sales of notebook computers and computer peripherals. In the entertainment software category, continued gains in sales of DVD DVD: see digital versatile disc.
DVD
 in full digital video disc or digital versatile disc

Type of optical disc. The DVD represents the second generation of compact-disc (CD) technology.
 movies and video game software partially offset continued softness in sales of prerecorded pre·re·cord  
tr.v. pre·re·cord·ed, pre·re·cord·ing, pre·re·cords
To record (a television program, for example) at an earlier time for later presentation or use.

Adj. 1.
 music and video game hardware. Appliance revenue decreased modestly in the mix during the quarter.

Digital products - including DVD hardware and software; digital cameras and camcorders; digital, plasma and LCD TVs A flat panel TV that uses LCD technology or a rear-projection TV that is based on LCD microdisplay panels. See flat panel TV, rear-projection TV and LCD. ; cellular telephones and digital broadcast systems - comprised 22 percent of revenue in the first quarter, up from 19 percent in the same period last year. Household penetration rates remain low for many of these products.

The Company opened four U.S. Best Buy stores during its fiscal first quarter, including two 45,000-square-foot stores and two 30,000-square-foot stores. The Company also opened two Best Buy stores in Canada during the quarter. Total retail square footage of continuing operations increased by approximately 0.9 percent in the quarter to 27.0 million square feet at period-end. The Company currently operates 552 U.S. Best Buy stores and 19 Magnolia Hi-Fi stores in the domestic segment, and 104 Future Shop stores and 10 Canadian Best Buy stores in the international segment.

Discontinued Operations Discontinued operations

Divisions of a business that have been sold or written off and that no longer are maintained by the business.
 

Total revenue at Musicland stores in the first quarter was approximately $300 million, a decline of 22 percent from the first quarter of fiscal 2003. This reduction reflected a 15.6-percent decline in comparable store sales, which was in line with expectations. Sales of prerecorded music continued to decline in the quarter, and Musicland closed 61 stores in the quarter. In March 2003, the Company announced that it is actively marketing its Musicland business, and the results of the Musicland subsidiary are now classified as discontinued operations. The Company today projected that the after-tax loss from discontinued operations for the first quarter will be in line with the earlier estimate. At the end of the first quarter, Musicland operated 76 Media Play stores, 683 Sam Goody Sam Goody is a music and entertainment retailer in the United States and formerly in the United Kingdom. It is owned and operated by Musicland, which itself is owned by former rival Trans World Entertainment which also runs Suncoast Motion Picture Company and, until January 2006,  stores and 378 Suncoast stores.

Company Raises First-Quarter Earnings Guidance

"Comparable store sales from continuing operations exceeded expectations," said Darren Jackson Darren Jackson (born 25 July 1966 in Edinburgh) is a former Scottish professional footballer. Career
Jackson played for Meadowbank Thistle, Newcastle United, Dundee United, Hibernian, Celtic, Coventry City, Hearts, Livingston, St. Johnstone and Clydebank.
, executive vice president and CFO See Chief Financial Officer.  of Best Buy. "Momentum built throughout the quarter as consumer sentiment improved, and we drove sales by making compelling offers to our customers. Consequently, we are raising our earnings estimate for continuing operations in the first quarter to 19 to 21 cents per diluted share from our previous guidance of 14 to 20 cents per diluted share. This new guidance includes the impact of one-time costs to close our previous corporate offices and move to our new corporate headquarters, as we previously discussed." The current consensus estimate for Best Buy's first-quarter diluted earnings is 17 cents per share Cents per share

The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned.
 from continuing operations.

Best Buy is scheduled to release its fiscal first-quarter earnings before the stock market opens on Wednesday, June 18. Its earnings conference call is scheduled to begin at 10 a.m. EDT EDT
abbr.
Eastern Daylight Time


EDT Eastern Daylight Time

EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York

EDT 
 on June 18 and will be available on its Web site both live and after the call, at www.BestBuy.com. Investors may access the call by clicking on "Investor Relations Investor relations

The process by which the corporation communicates with its investors.
."

Statements made in this news release, other than those concerning historical financial information, should be considered forward-looking and subject to various risks and uncertainties. Such forward-looking statements forward-looking statement

A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections.
 are based on management's beliefs and assumptions regarding information currently available, and are made pursuant to the "safe harbor Safe Harbor

1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated.

2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive.
" provisions of Section 27A of the Securities Act of 1933, as amended a·mend  
v. a·mend·ed, a·mend·ing, a·mends

v.tr.
1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive.

2.
, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company's actual results could differ materially from those expressed in the forward-looking statements. Factors that could cause results to vary include, among others, those expressed in the Company's filings with the Securities and Exchange Commission. The Company has no obligation to publicly update or revise any of the forward-looking statements that may be in this news release.

About Best Buy Co., Inc.

Minneapolis-based Best Buy Co., Inc. is North America's leading specialty retailer of consumer electronics, personal computers, entertainment software and appliances. The Company's subsidiaries operate retail stores and/or web sites under the names: Best Buy (BestBuy.com), Future Shop (FutureShop.ca), Geek Squad The Geek Squad is a subsidiary of the Best Buy Company and is based in Richfield, Minnesota [1]. Originally founded in 1994 by Robert Stephens, it offers various computer-related services and accessories for residential and commercial clients.  (GeekSquad.com), Magnolia Hi-Fi (MagnoliaHiFi.com), Media Play (MediaPlay.com), Sam Goody (SamGoody.com) and Suncoast (Suncoast.com). The Company's subsidiaries reach consumers through over 1,800 retail stores in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Canada, Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla.  and the U.S. Virgin Islands.
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