Best Buy Raises 4Q View on Strong Sales

Thursday, February 9th 2006, 10:55 am
By: News On 6

MINNEAPOLIS (AP) _ Best Buy Co. Inc., the nation's biggest consumer electronics chain, on Thursday raised its fourth-quarter financial forecast, and its shares jumped more than 8 percent in early trading.

For the quarter ending Feb. 25, Best Buy projected earnings from continuing operations of $1.25 to $1.30 per share, versus its previous view, which called for earnings at the high end of a $1.06 to $1.16 per share range. For fiscal 2006, Best Buy forecast earnings from continuing operations of $2.24 to $2.29 per share.

Analysts' average estimates are $1.16 per share for the current quarter, and $2.14 for 2006, according to a survey by Thomson Financial.

In the prior-year period, the retailer reported adjusted earnings from continuing operations of $1.04 per share.

Best Buy credited strong revenue trends driven by gift-card spending, sales of flat-panel televisions, and tighter expense controls for its improved outlook.

Sales in stores open at least one year _ a closely watched performance gauge called comparable sales _ are expected to increase 6 percent to 7 percent in the fourth quarter, up from a previously forecast 3 percent to 5 percent range.

Darren Jackson, chief financial officer, said comparable store sales rose by the low double-digit percentages in January on the strength of flat-panel televisions, portable audio players and video gaming.

CEO Brad Anderson credited the company's ongoing effort to convert its stores to focus on particular customer groups, such as soccer moms or small-business owners, for the improved outlook.

``Additionally, we're gearing up to open a record number of new stores in the coming year as we continue to grow our business,'' he said in a prepared statement.

Best Buy announced that it planned to open nearly 90 new stores in the United States and Canada during its 2007 fiscal year. Most of the stores were scheduled to open in the third quarter, in time to catch the holiday shopping season.