Best Buy Third-Quarter Comparable Store Sales Increase 8.6 Percent; Revenue Increases 18% to $6.03 Billion.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--Dec. 4, 2003
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Third-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 $6.03 18% 8.6%
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Domestic $5.43 15% 9.0%
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International $0.60 42% 4.0%
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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 $16.10 15% 5.8%
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Domestic $14.62 13% 6.0%
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International $1.48 39% 3.0%
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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.
In the third quarter of fiscal 2004, we refined our methodology for
calculating our comparable store sales percentage change. It now
reflects the impact of non-point-of-sale (non-POS) revenue
transactions, including delivery revenue, mail-in rebates and costs
associated with Reward Zone, our new customer loyalty program.
Previously, our comparable store sales calculation was based only on
store POS revenue. Using our new methodology, the comparable store
sales gains for the first and second quarters of fiscal 2004 would
have been 1.3% and 6.7%, respectively, compared with 2.2% and 7.5%,
respectively, as previously reported. We refined our comparable store
sales calculation in light of changes in our business. The change did
not impact previously reported revenue, earnings or cash flow.
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 comparable store sales for the fiscal quarter ended Nov. 29, 2003, increased 8.6 percent compared with the third quarter of fiscal 2003. "We capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. on the improvement in consumer confidence in the third quarter with growth in all our brands - Best Buy, Future Shop 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," 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. "I am pleased that the customer focus demonstrated by our employees drove such a strong gain in comparable store sales, making it our best quarterly comp comp See comparison. gain in over two years. Our success is reflected in the high customer satisfaction and loyalty ratings we achieved in the quarter. We believe we continue to gain market share in 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. , advanced TVs, particularly 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. and plasma televisions, and digital cameras and camcorders." Revenue 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 rose 18 percent to $6.03 billion for the third quarter of fiscal 2004, compared with $5.13 billion for the Company's fiscal 2003 third quarter. The increase was driven by the comparable store sales gain of 8.6 percent, as well as the addition of 72 stores in the past 12 months. Third-Quarter Earnings Guidance Narrowed The Company expects third-quarter earnings from continuing operations of 35 to 37 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, which is within its previously reported guidance range of 33 to 38 cents per diluted share. The updated guidance represents an increase of 30 to 37 percent over earnings from continuing operations of 27 cents per diluted share for the third quarter of fiscal 2003. The analysts' consensus estimate is currently 37 cents per diluted share. "Earnings for the third quarter were reduced by a write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of technology assets that totaled approximately $13 million, or three cents per diluted share," added Anderson. "In addition, we continued to test changes at our customer centricity Customer centricity refers to the orientation of a company to the needs and behaviours of its customers, rather than internal drivers (such as the quest for short term profit). lab stores as part of our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. plan." U.S. Best Buy Stores Show Strongest Comparable Store Sales Growth Revenue for the domestic segment, which includes U.S. Best Buy stores and Magnolia Audio Video stores, rose 15 percent for the third quarter to $5.43 billion. The increase reflected a domestic comparable store sales gain of 9.0 percent and incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. revenue from the addition of 54 U.S. Best Buy stores and three Magnolia Audio Video stores in the past 12 months. Higher customer traffic was the primary driver of the comparable store sales gain. BestBuy.com, the Company's domestic Internet shopping site, also posted a significant improvement in revenue as on-line traffic grew. At Magnolia Audio Video, revenue for the third quarter rose 31 percent to approximately $40 million. The high-end retailer of consumer electronics posted a comparable store sales gain of 4.0 percent for the third quarter. For the international segment, comprised of Future Shop stores and Canadian Best Buy stores, revenue totaled approximately $600 million, an increase of 42 percent compared with the prior year's third quarter. The third-quarter revenue increase was driven by the addition of four Future Shop stores and 11 Canadian Best Buy stores in the past 12 months. The international segment achieved a comparable store sales gain of 4.0 percent as average ticket and store traffic both improved for the quarter. Online revenue through FutureShop.ca, the leading retail Internet site in Canada, also contributed to the increase. In addition, the revenue comparison benefited from the stronger Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents ; without the impact of the stronger Canadian dollar, revenue would have increased approximately 21 percent for the third quarter. For the first nine months of fiscal 2004, revenue from continuing operations for the Company increased 15 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 5.8 percent. Domestic revenue grew 13 percent for the same nine-month period, while the higher proportion of new stores in Canada and the stronger Canadian dollar pushed the gain in international revenue to 39 percent. Total retail square footage increased by approximately 9.0 percent to 29.1 million square feet at the end of the fiscal third quarter, compared with the prior year's period. The Company opened 34 U.S. Best Buy stores during its fiscal third quarter, including 15 of its 45,000-square-foot stores and 19 of its smaller-format stores. During the quarter, the Company also opened three of its 36,000-square-foot and two of its 30,000-square-foot Best Buy stores in Canada and two Future Shop stores, one at 30,000 square feet and one at 20,000 square feet. Magnolia Audio Video opened two new stores in the quarter, including a store adjacent to an existing Best Buy store. At the end of the fiscal third quarter, the Company operated 600 U.S. Best Buy stores and 22 Magnolia Audio Video stores in the domestic segment, and 108 Future Shop stores and 19 Canadian Best Buy stores in the international segment. Home Office Product Category Shows Highest Growth in the Quarter The Company's revenue mix from continuing operations, by major product category, is shown below.
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Third Quarter Ended Nine Months Ended
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Product Category Nov. 29, Nov. 30, Nov. 29, Nov. 30,
2003 2002 2003 2002
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Consumer Electronics 37% 38% 37% 37%
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Home Office 36% 34% 37% 35%
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Entertainment Software 21% 22% 20% 21%
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Appliances 6% 6% 6% 7%
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Total 100% 100% 100% 100%
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The consumer electronics product category contributed the largest share of revenue for the third quarter although it declined modestly in the revenue mix, compared with the prior year's period. Comparable store sales for that category increased in the mid-single digits. Advanced televisions -- including plasma, LCD and digital televisions -- led the gain as attractive offerings increased consumer interest. Digital cameras, digital camcorders and satellite systems all showed strong double-digit comparable store sales gains, leading to a gain for the video subcategory sub·cat·e·go·ry n. pl. sub·cat·e·go·ries A subdivision that has common differentiating characteristics within a larger category. in the low 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. . The audio subcategory showed a decline in comparable store sales in the mid single digits. The home office product category increased in the revenue mix for the third quarter, compared with the prior year's period, reflecting a comparable store sales gain in the low double digits. The home office category's performance was led by ongoing growth in notebook computers as consumers indicated their desire for portability. The strong improvement in this category was aided by a high-single-digit comparable store sales gain for desktop computers and strong double-digit comparable store sales gains for computer networking
Computer networking is the engineering discipline concerned with communication between computer systems or devices. products and MP3 devices. The continuing strength in revenue from desktop computers reflects market share gains as well as customers' increased use of that solution to enable digital imaging and other media applications. The share of revenue derived from the entertainment software product category declined modestly for the third quarter, as the category had a comparable store sales gain in the high single digits. Both DVDs and CDs showed strong double-digit comparable store sales gains, as a powerful new-release schedule and improved assortments drove revenue. Music revenue was aided by the success of Best Buy's exclusive Rolling Stones Rolling Stones, English rock music group that rose to prominence in the mid-1960s and continues to exert great influence. Members have included singer Mick Jagger (Michael Phillip Jagger), 1943–; guitarists Brian Jones 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. set, Four Flicks Four Flicks is a 4 disc DVD released by The Rolling Stones. It was exclusively marketed to Best Buy stores only. The collection documents several of the Stones' shows from their 2002-2003 Licks World Tour. , as well as improvement in core music performance. Other strong DVD titles included Matrix Reloaded, Indiana Jones Trilogy A company founded in 1979 by Gene Amdahl to commercialize wafer scale integration and build supercomputers. It raised a quarter of a billion dollars, the largest startup funding in history, but could not create its 2.5" superchip. , Finding Nemo and Lion King. Increased revenue from computer security and productivity software fueled a gain in the mid-single-digits for computer software, while comparable store sales for video game hardware and software declined by the low double digits, reflecting price decreases in several hardware platforms Each hardware platform, or CPU family, has a unique machine language. All software presented to the computer for execution must be in the binary coded machine language of that CPU. Following is a list of the major hardware platforms in existence today. See platform. and slowing revenue from software. Appliances were unchanged in the revenue mix for the third quarter as the category showed a slight gain in comparable store sales. An increased 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. in higher-end laundry Laundry can be:
Before industrialization , refrigerator and dishwasher products benefited revenue, as did several promotions during the period. Special orders contributed to both the revenue increase and a slight gain in the average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. . 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 hardware and software; cellular telephones and digital broadcast systems - comprised 27 percent of revenue for the third quarter of fiscal 2004, up from 23 percent for the same period last year. Company Third-Quarter Earnings Guidance in Line with Previous Range The Company narrowed its guidance for third-quarter earnings from continuing operations to a range of 35 to 37 cents per diluted share, compared with its prior guidance of 33 to 38 cents per diluted share issued on Sept. 17. Earnings from continuing operations for the third quarter of fiscal 2003 were 27 cents per diluted share. "We are pleased that our gross profit rate for the third quarter will improve as we projected earlier," 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 - finance and chief financial officer. "The gross profit rate benefited from improvements in our pricing and exceptional execution at the store level. These gains were partially offset by the impact of the increase of home office products in the revenue mix as well as the allowance for redemption of certificates earned through Reward Zone, our customer loyalty program." "In addition, we expect to realize a modest improvement in our SG&A rate for the third quarter," Jackson commented. "One of the factors that limited our expense leverage in the quarter was the write-off of technology assets, which was not expected and which reduced third-quarter earnings by approximately 3 cents per diluted share." Best Buy is scheduled to release its fiscal third-quarter earnings before the stock market opens on Wednesday, Dec. 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 Dec. 17 and is expected to 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." 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. (NYSE:BBY) 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 approximately 750 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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