Best Buy profits fall 23 percent in quarter

Company of interest: Best Buy

CHICAGO -- Consumers snapped up surprising numbers of flat-screen TVs, laptops, digital cameras and cell phones from Best Buy during its fourth quarter even as rival Circuit City was in bankruptcy and began liquidating its stores.

The purchases helped Best Buy Co. Inc. boost sales by 10 percent, the company reported yesterday.

Henrico County-based Circuit City Stores Inc. announced Jan. 16 that it would shut down and liquidate its stores. Its last store closed March 8.

Best Buy's sales were strongest in February, and the world's largest consumer-electronics retailer said same-store sales might have been even better if a plan to scale back inventory hadn't left some stores short of TVs and digital cameras that shoppers were seeking.

"We were surprised with demand," said Chief Operating Officer Brian Dunn, who is set to become chief executive this summer. "We know we left some sales on the table in January and February."

Despite the revenue growth, the company said its profit sank 23 percent, mostly because of one-time charges, for the three months that ended Feb. 28.

And executives promised to take advantage of the liquidation of their closest competitor to attract customers who used to shop exclusively at Circuit City.

"We believe this environment presents a tremendous amount of opportunity, and we intend to take full advantage of those opportunities," Dunn said.

Best Buy's profit fell 23 percent to $570 million, or $1.35 per share, as restructuring charges dragged down results. That compares to $737 million, or $1.71 per share, a year earlier.

Excluding those one-time charges that amounted to 26 cents per share, Best Buy earned $682 million, or $1.61 per share -- well ahead of forecasts, which were lowered after the company cautioned the recession would drag down sales and profits.

Revenue grew 10 percent to $14.72 billion, up from $13.42 billion during the same period. The boost also came from help from Best Buy Europe and 213 new store openings within the past year. -- The Associated Press