Best Buy Second-Quarter Revenue From Continuing Operations Increases 17% To $5.39 Billion.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--Sept. 4, 2003 Company expects Q2 earnings 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 of 41 to 43 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, compared with analysts' consensus of 40 cents
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Second-Quarter Revenue Summary - Fiscal 2004
(U.S. dollars in billions)
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Comparable Store
Revenue Revenue Gain Sales Gain(1)
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Continuing Operations(2) $5.39 17% 7.5%
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Domestic $4.91 14% 7.8%
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International $0.48 44% 4.1%
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Year-to-Date Revenue Summary - Fiscal 2004
(U.S. dollars in billions)
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Comparable Store
Revenue Revenue Gain Sales Gain(1)
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Continuing Operations(2) $10.06 14% 5.0%
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Domestic $9.19 12% 5.2%
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International $0.87 36% 2.2%
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(1) Comprised of 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 gain excludes the impact of
fluctuations in foreign currency exchange rates. It also excludes
Musicland revenue, which is included in discontinued operations.
(2) Excludes Musicland revenue through the date of sale; Musicland has
been classified as discontinued operations for all periods presented.
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 that revenue from continuing operations rose 17 percent to $5.39 billion for the fiscal quarter ended Aug. 30, 2003, compared with $4.62 billion for the Company's fiscal 2003 second quarter. The Company also said it expects second-quarter earnings from continuing operations of 41 to 43 cents per diluted share, compared with the current analysts' consensus estimate of 40 cents per diluted share. The second-quarter revenue increase was driven by a comparable store sales gain of 7.5 percent, as well as the addition of 74 stores in the past 12 months. The updated earnings guidance, which was at the high end of the Company's prior guidance, reflected the higher-than-anticipated comparable store sales gain, driven by strong sales of computers during the back-to-school season. "Very strong sales volume, an improved gross profit rate and our 'efficient enterprise' strategy have positioned us for an outstanding fiscal second quarter," 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 this strong performance resulted from higher customer traffic levels in our stores, which were driven in part by the federal tax refunds Tax refund Money back from the government when too much tax has been paid or withheld from a salary. received by consumers; our employees' superior commitment and execution; and market share gains." Sales Gains at U.S. Best Buy Stores Lead the Group Revenue for the domestic segment, which includes U.S. Best Buy stores and Magnolia Audio Video Magnolia Audio Video is a specialty consumer electronics retailer in the United States. It currently operates 13 standalone stores throughout Washington, Oregon, and California. stores, rose 14 percent in the second quarter to $4.91 billion, reflecting a domestic comparable store sales gain of 7.8 percent and the addition of 51 U.S. Best Buy stores as well as four Magnolia Audio Video stores in the past 12 months. The sales gain was driven by a combination of significantly higher levels of customer traffic and a modest improvement in the average amount spent by customers. All U.S. regions for Best Buy posted comparable store sales gains, with the home office and consumer electronics categories experiencing the largest revenue improvement in the quarter. During the quarter, Best Buy launched a customer loyalty program, Reward Zone, which was favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. received by customers. At 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, which is now doing business as Magnolia Audio Video, revenue for the second quarter rose 10 percent to approximately $30 million, reflecting the impact of stores opened in the past 12 months. The revenue growth at the Seattle-based retailer was partially offset by a comparable store sales decline of 5.9 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, revenue totaled approximately $480 million, an increase of 44 percent compared with the prior year's second quarter. The second-quarter revenue increase reflected the addition of six Future Shop stores and 13 Canadian Best Buy stores in the past 12 months. In addition, the international segment had a comparable store sales gain of 4.1 percent primarily due to increases in both customer traffic and the average amount spent by customers. The international comparable store sales gain included a strong gain in online revenue, resulting from increased online traffic. International stores' sales of digital cameras, digital televisions, MP3 players A digital music player that supports the MP3 format, which was the audio format that started a revolution in online music downloads and distribution. All portable music players, the iPod being the most popular, support MP3 along with one or more other audio formats. and many home office products showed strength in the quarter. In the first half of fiscal 2004, total revenue from continuing operations increased 14 percent over that of the same period of the prior year, driven by the addition of new stores and a comparable store sales gain of 5.0 percent. Domestic and international revenue grew 12 percent and 36 percent, respectively, in the same six-month period. The Company opened 14 U.S. Best Buy stores during its fiscal second quarter, including three of its 45,000-square-foot stores and 11 of its 30,000-square-foot stores. During the quarter the Company also opened three of its 36,000-square-foot and one of its 30,000-square-foot Best Buy stores in Canada and two Future Shop stores, with the latter measuring 28,000 and 20,000 square feet, respectively. Magnolia Audio Video opened a 13,000-square-foot store during the quarter. Continuing operations' total retail square footage increased by approximately 2.4 percent during the quarter to 27.7 million square feet at period-end. The Company currently operates 566 U.S. Best Buy stores and 20 Magnolia Audio Video stores in the domestic segment, and 106 Future Shop stores and 14 Canadian Best Buy stores in the international segment. Home Office Category Sales Lead A sales lead is the identity of a person or entity potentially interested in purchasing a product or service, and represents the first stage of a sales process. The lead may have a corporation or business associated with the person(s). the Growth in the Quarter The Company's revenue mix from continuing operations, by major product category, is shown below.
Product Revenue Mix Summary - Continuing Operations
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Second Quarter Ended Six Months Ended
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Product Category Aug. 30, Aug. 31, Aug. 30, Aug. 31,
2003 2002 2003 2002
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Home Office 39% 36% 37% 36%
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Consumer Electronics 35% 36% 36% 36%
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Entertainment Software 19% 20% 20% 20%
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Appliances 7% 8% 7% 8%
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Total 100% 100% 100% 100%
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Due primarily to increased revenue from 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. , revenue from the home office category increased in the mix during the second quarter. The comparable store sales gain in notebook computers was in the strong double digits Double Digits was a pricing game on the American television game show, The Price Is Right. Played from April 20, 1973 through May 18, 1973's show, it was played for a car and used small prizes. ; in addition, comparable store sales of desktop computers reversed recent trends, gaining by the high single digits. The category benefited from increased use of computers as media servers, the rising popularity of digital photography and technology advances. The consumer electronics category declined slightly in the revenue mix for the quarter despite a comparable store sales gain that reflected increasing demand for digital, plasma and LCD (Liquid Crystal Display) A display technology that uses rod-shaped molecules (liquid crystals) that flow like liquid and bend light. Unenergized, the crystals direct light through two polarizing filters, allowing a natural background color to show. televisions, as well as the rising popularity of digital cameras and camcorders. Comparable store sales of digital televisions increased by the strong double digits. The Company significantly expanded its assortment assortment /as·sort·ment/ (ah-sort´ment) the random distribution of nonhomologous chromosomes to daughter cells in metaphase of the first meiotic division. as·sort·ment n. of digital televisions during the second quarter, in response to heightened consumer interest in these products. Revenue from entertainment software also declined in the mix, although comparable store sales for the category increased by the low single digits for the quarter. Comparable store sales of DVDs increased by strong double-digits and were supported by sales of popular new releases. These gains were largely offset by a comparable store sales decline in CDs and video game hardware and software. Appliances declined in the revenue mix, as a cool June limited demand for air conditioners Conditioners used on leather take many shapes and forms. They are used mostly to keep leather from drying out and deteriorating. A very old and widely used conditioner is dubbin. and refrigeration refrigeration, process for drawing heat from substances to lower their temperature, often for purposes of preservation. Refrigeration in its modern, portable form also depends on insulating materials that are thin yet effective. . The appliances category posted a comparable store sales decline in the low-single digits. The Company improved its assortment of appliances in the quarter, including a new special order system and the launch of appliances on BestBuy.com. Digital products - including 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. ; digital cameras and camcorders; 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. hardware and software; cellular telephones and digital broadcast systems - comprised 24 percent of revenue in the second quarter of fiscal 2004, up from 20 percent in the same period last year. Company Second-Quarter Earnings Guidance At High End Of Range The Company updated its guidance for second-quarter earnings from continuing operations to a range of 41 to 43 cents per diluted share, at the high end of its prior guidance of 37 to 42 cents per diluted share issued on Aug. 7. Earnings from continuing operations for the second quarter of fiscal 2003 were 24 cents per diluted share. "This quarter exemplifies the degree of operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. leverage we can achieve when we focus on our four strategic priorities," stated 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 - finance and chief financial officer. "We put together a powerful combination of outstanding comparable store sales gains, an improving gross profit rate and tight expense controls. Working together, these factors can leverage a 17-percent revenue gain into a 75-percent increase in earnings per share versus the prior year. "In light of our second-quarter guidance, we are raising our earnings guidance for fiscal 2004 to a new range of $2.30 to $2.35 per diluted share from continuing operations, a 22-percent increase compared with $1.91 per diluted share for fiscal 2003. We expect to provide our initial guidance for the third and fourth quarters during our earnings conference call on Wednesday, Sept. 17," Jackson Jackson. 1 City (1990 pop. 37,446), seat of Jackson co., S Mich., on the Grand River; inc. 1857. It is an industrial and commercial center in a farm region. added. "Meanwhile, I would like to publicly thank our employees for their diligence in pursuing opportunities for operating income rate improvement, while driving increased customer traffic." Best Buy is scheduled to release its fiscal second-quarter earnings before the stock market opens on Wednesday, Sept. 17. 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 Sept. 17 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 "For Our Investors" and the "News Releases" link. The Company also is presenting at the Goldman Sachs The Goldman Sachs Group, Inc., or simply Goldman Sachs (NYSE: GS) is one of the world's largest global investment banks. Goldman Sachs was founded in 1869, and is headquartered in the Lower Manhattan area of New York City at 85 Broad Street. 10th annual global retailing conference on the morning of Sept. 5 and is planning to Web cast the presentation on its Web site both live and after the call. Investors may access the Web cast by clicking on "For Our Investors" and the "Presentations" link. Discontinued Operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. The Musicland Group, Inc., previously a wholly-owned, indirect subsidiary, was acquired by Sun Capital Partners Inc. as of June 16, 2003. Through the date of the transaction, Musicland had second-quarter revenue of $50 million versus revenue of $380 million for the full second quarter of fiscal 2003. Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. through June 16, 2003, Musicland contributed revenue of $350 million, compared with revenue of $770 million for the first full six months of fiscal 2003. Musicland financial results for all periods presented are included in discontinued operations. 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), and Magnolia Audio Video (Magnoliaav.com). The Company's subsidiaries reach consumers through more than 700 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. and Canada. |
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