Best Buy Reports Third Quarter Earnings.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--Dec. 12, 2000 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) ) today reported financial results for the third quarter of its fiscal 2001 year, which ended November November: see month. 25, 2000. Best Buy reported net earnings of $57.3 million, or 27 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, for the third quarter of fiscal 2001, a 27% decrease, compared to $78.4 million, or 37 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. , in the third quarter last year. For the first nine months of fiscal 2001, net earnings increased 12% to $206.2 million, or 97 cents per diluted share, compared to $183.3 million, or 86 cents per share, for the same period last year. "The market conditions changed significantly during the third quarter. The combination of slowing consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. and a more promotional environment reduced profits during the quarter," said Richard M. Schulze Richard M. "Dick" Schulze is the Founder and Chairman of Best Buy. He was born and raised in St. Paul, Minnesota where he graduated from Central High School, afterwards attending Marquette University (he did not graduate[1]). He subsequently spent time in the U.S. , Best Buy Founder, 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. . "We are pleased with our 20% top-line growth and 5.9% comparable store sales increase for the quarter. These market share gains have historically positioned us to manage through difficult economic conditions. In addition, we anticipate that these gains will benefit the upcoming holiday season." Total revenues for the third quarter increased 20% to $3.7 billion from $3.1 billion a year ago. Comparable store sales increased 5.9% for the quarter on top of the 9.2% increase last year. For the nine-month period, revenues were $9.9 billion, a 21% increase from $8.2 billion the previous year. Comparable store sales for the nine-month period increased 6.7% over the same period a year ago. Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: was 2.3% of sales for the quarter compared to 3.9% of sales for the corresponding quarter last year. During the quarter, the Company incurred significant start-up Start-up The earliest stage of a new business venture. costs to open 40 new stores, including entry in the New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of market, and costs associated with the marketing of BestBuy.com for the holiday season. These costs were planned and had been previously communicated. Gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. were 18.5% and 19.7% of sales for the quarter and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. periods, respectively, representing a 0.5% of sales decrease for the quarter and a 0.3% of sales improvement over the nine-month period last year. The promotional environment intensified in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: in the third quarter impacting gross profit margins. Selling, general and administrative expenses (SG&A) were 16.2% and 16.6% of sales for the quarter and nine-month periods, respectively, versus expense ratios of 15.1% and 15.9% for last year's comparable periods. The significant start-up costs for the New York market opening, the BestBuy.com national holiday launch and the opening of 40 new stores in the quarter compared to 22 new stores a year ago, impacted these expenses. The increased advertising expense associated with these events represented a majority of the year-over-year increase in SG&A. "All of these investments give Best Buy access to a larger consumer base, both on-line and through our retail stores," added Schulze Schulze is a common German family name. It may refer to:
Net interest income was $7.8 million in the quarter compared to net interest income of $4.5 million last year. The Company's cash balance at the quarter-end was $729 million, a $214 million increase over last year's third quarter. Best Buy operates 413 stores in 41 states compared with 354 stores a year ago. The Company expects to open approximately 10 new stores toward the end of the fiscal fourth quarter. For fiscal year 2002, which begins March 4, 2001, the Company anticipates opening approximately 60 new stores. Management will host a conference call to be broadcast via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the today at 9:00 a.m. CST CST abbr. 1. Central Standard Time 2. convulsive shock treatment CST Central Standard Time Noun 1. . Individuals may access the Web cast from the Company's Web site at http://www.BestBuy.com by clicking on the "About Us" link at the top of the home page, then clicking on the "Investor Relations Investor relations The process by which the corporation communicates with its investors. " link, then selecting "Investor's Overview." The call will be posted on the Audio Archive page of Best Buy's Web site and will be available approximately 1/2 hour following the call. The audio replay will also be available beginning at 12:30 p.m. CST today through midnight Wednesday Wednesday: see week. , December December: see month. 13, 2000. The audio replay number is (800) 475-6701, access code 549309. Best Buy quarterly financial results and news releases can be found on the Internet at the Company's Web site, http://www.BestBuy.com, or accessed via the Business Wire Web site at http://www.businesswire.com. 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 the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. 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 identified 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. Minneapolis-based Best Buy Co., Inc. (NYSE:BBY) is the nation's number one volume specialty retailer of consumer electronics, personal computers, entertainment software and appliances. The Company currently operates more than 400 retail locations in 41 states and online at http://www.BestBuy.com.
BEST BUY CO., INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
Nov. 25, 2000 Nov. 27, 1999 Nov. 25, 2000 Nov. 27, 1999
-------------- -------------- -------------- --------------
Revenues $3,732,080,000 $3,107,337,000 $9,864,969,000 $8,179,408,000
Cost of
goods sold 3,043,039,000 2,516,970,000 7,921,590,000 6,596,519,000
-------------- -------------- -------------- --------------
Gross
profit 689,041,000 590,367,000 1,943,379,000 1,582,889,000
Gross
profit % 18.5% 19.0% 19.7% 19.4%
Selling,
general &
administrative
expenses 604,028,000 467,779,000 1,634,498,000 1,298,994,000
SG&A % 16.2% 15.1% 16.6% 15.9%
-------------- -------------- -------------- --------------
Operating
income 85,013,000 122,588,000 308,881,000 283,895,000
Net interest
income 7,750,000 4,451,000 25,188,000 13,140,000
-------------- -------------- -------------- --------------
Earnings before
income tax
expense 92,763,000 127,039,000 334,069,000 297,035,000
Income tax
expense 35,500,000 48,650,000 127,900,000 113,770,000
Effective
tax rate 38.3% 38.3% 38.3% 38.3%
-------------- -------------- -------------- --------------
Net
earnings $ 57,263,000 $ 78,389,000 $ 206,169,000 $ 183,265,000
============== ============== ============== ==============
Net earnings
per share
Basic $ 0.28 $ 0.38 $ 1.00 $ 0.90
Diluted $ 0.27 $ 0.37 $ 0.97 $ 0.86
Weighted
number of
shares (000's)
Basic 207,683 204,784 206,277 204,618
Diluted 213,007 212,760 212,688 213,430
BEST BUY CO., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
Nov. 25, 2000 Nov. 27, 1999
-------------- --------------
ASSETS
Current assets
Cash & cash equivalents $ 728,796,000 $ 514,797,000
Receivables 427,113,000 383,461,000
Recoverable costs from developed
properties 110,854,000 87,377,000
Merchandise inventories 2,327,798,000 2,082,543,000
Other current assets 58,139,000 40,601,000
-------------- --------------
Total current assets 3,652,700,000 3,108,779,000
Net property & equipment 1,049,801,000 609,087,000
Other assets 79,463,000 54,187,000
-------------- --------------
TOTAL ASSETS $4,781,964,000 $3,772,053,000
============== ==============
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $2,483,262,000 $2,070,254,000
Accrued compensation & related expenses 105,668,000 78,691,000
Accrued liabilities 420,453,000 359,062,000
Current portion of long-term debt 5,809,000 9,046,000
-------------- --------------
Total current liabilities 3,015,192,000 2,517,053,000
Long-term liabilities 119,921,000 72,932,000
Long-term debt 20,948,000 23,679,000
Shareholders' equity 1,625,903,000 1,158,389,000
-------------- --------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $4,781,964,000 $3,772,053,000
============== ==============
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