Best Buy (BBY) Reports 8.2% Jump in Dec. Same Store Sales; Affirms FY10 Outlook

Best Buy Co., Inc. (NYSE: BBY) today reported from the Consumer Electronics Show that revenue for the fiscal month of December ended Jan. 2, 2010, increased 13 percent to $8.5 billion. The revenue for the five-week period compared with $7.5 billion in revenue for the five-week period ended Jan. 3, 2009. The revenue gain was due primarily to a comparable store sales increase of 8.2 percent, the addition of new stores in the past 12 months and the favorable impact of fluctuations in foreign currency exchange rates.

“Our ability to out-perform the market is due entirely to the hard work of our employees around the world, and it’s very gratifying that our focus on the customer is producing such great results,” said Brian Dunn, CEO of Best Buy. “The holiday selling season is critically important to a retailer. Our preparations for December begin in January, and this year the stakes were higher than ever, given the tough environment we’re all navigating. I couldn’t be more proud of the extraordinary effort our people put forth – at our support, distribution and service centers, and, of course, in our stores.”

Market Share Gains In Connected Devices Drive Domestic Comparable Store Sales Increase

The company’s domestic segment generated $6.7 billion in revenue for fiscal December, an increase of 13 percent when compared with the same period last year. The domestic revenue performance included a comparable store sales increase of 9.3 percent and gains from new stores in the past 12 months. Additionally, the company noted that domestic online revenue in fiscal December increased 34 percent versus the prior year, driven primarily by growth in Web site traffic.

Within the domestic segment, the home office category experienced a 28.5 percent comparable store sales increase driven by Best Buy’s broad assortment of notebook computers and mobile phones combined with a differentiated customer experience. The consumer electronics category posted a 4.5 percent comparable store sales increase as customers continued to respond favorably to Best Buy’s industry-leading assortment of televisions. The appliances category experienced a 16.2 percent comparable store sales increase and the services category recorded flat comparable store sales. The entertainment software category comparable store sales declined 0.6 percent driven primarily by an increase in gaming which was more than offset by continued decreases in music and movies.

Best Buy believes its domestic segment continued to experience strong market share gains during the month ended Nov. 30, 2009, as compared to the prior year, with an acceleration in share gains versus its most recently reported three-month trend. The company believes these gains were most pronounced in categories deemed critical to its connected world strategy such as televisions, notebook computers, digital imaging and mobile phones. Furthermore, the company believes that it continued to gain market share in the month of December versus the prior-year period.

The company's international segment increased its fiscal December revenue by 13 percent to $1.8 billion as compared to the prior-year period. The increase was driven primarily by the favorable fluctuations in foreign currency exchange rates, the addition of new stores in the past 12 months and comparable store sales gains of 3.5 percent driven by China and Europe. As a reminder, the company's Europe and China operations are reported on a two-month lag and therefore reflect fiscal October results. Excluding the impact of foreign currency fluctuations, revenue increased 4 percent in fiscal December compared to the prior-year period. A low-single-digit comparable store sales gain in Europe was driven by improved year-over-year connections growth. The company reported a mid-double-digit comparable store sales gain in China that was driven by strong year-over-year performance during the Golden Week holiday. Strong year-over-year performance during the Boxing Day holiday period in Canada resulted in a low-single-digit comparable store sales decline for the fiscal month of December, an improvement versus the reported fiscal third quarter trend.

Company Maintains Fiscal 2010 Annual Guidance

Jim Muehlbauer, Best Buy’s executive vice president of finance and CFO said, “Our employees have done an outstanding job of meeting the needs of customers and delivering strong performance in this challenging consumer spending environment. Based on fiscal December results, we continue to expect annual revenue and diluted earnings per share results within our previously announced guidance ranges.”

The company expects to report its fiscal fourth-quarter earnings and provide its initial earnings and new store opening guidance for fiscal 2011 on March 25, 2010.

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