MINNEAPOLIS — Best Buy Co., the nation’s largest consumer electronics retailer, reported a 52-percent jump in third-quarter profits and it lowered predictions for the next three months.
Best Buy’s third-quarter profit was well ahead of analysts’ expectations. TV prices fell less than last year. Best Buy added stores, but kept a lid on corporate expenses. And a fluke in the calendar plopped an extra week of post-Thanksgiving holiday shopping into the third quarter.
But what the calendar gave in the third quarter, it will take away in the fourth. Without giving formal quarterly guidance, interim Chief Financial Officer Jim Muehlbauer acknowledged on a conference call that the results implied fourth-quarter earnings of $1.70 per share to $1.80 per share. Analysts are expecting $1.82.
The company said the rapid revenue growth of the third quarter would slow in the fourth because the extra holiday shopping week falls in the third quarter, and because this year’s fourth quarter is one week shorter than last year’s.
Best Buy shares rose 48 cents to close at $51.62 after earlier falling as much as 3.7 percent.
The early drop surprised RBC Capital Markets analyst Scot Ciccarelli. He attributed it to confusion over the impact of the calendar shift and pointed out that Best Buy is still projecting earnings-per-share growth of 20 percent once that’s taken into consideration.
Best Buy earned $228 million, or 53 cents per share, for the quarter that ended Dec. 1, up from $150 million, or 31 cents per share, during last year’s third quarter, which ended Nov. 25. Revenue rose 17 percent to $9.93 billion from $8.47 billion in 2006.
Analysts surveyed by Thomson Financial were expecting 41 cents per share on revenue of $9.44 billion.
“It’s not as clean of a beat (of analyst expectations) as it appears on the front. But at the end of the day it was still a pretty significant outperformance in the third quarter,” he said.
Muehlbauer said December is “trending within the range of our predicted outcomes for the quarter.”
“Historically we know that our customers are shopping later and later each year. Accordingly we were planning and are prepared for a strong finish for the holiday season,” he said.
Same-store sales rose 6.7 percent, helped by higher average selling price as customers bought higher-priced items such as video game consoles, notebook computers and GPS devices. The calendar shift contributed 2.5 percentage points of that gain.
Best Buy said total television sales in comparable stores were flat versus a year ago, because growth in flat-panel TVs was offset by declines in projection and tube TVs.
Sales jumped 32 percent to $1.72 billion in Best Buy’s international operations, which include stores in Canada and China.
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