Consumers snapped up surprising numbers of flat-screen televisions, laptops, digital cameras and cell phones during the fourth quarter, helping Best Buy Co. Inc. boost sales by 10 percent, the company reported Thursday.
The quarter'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 shoppers were seeking.
"We were surprised with demand," Chief Operating Officer Brian Dunn, who is set to become chief executive this summer, said in an interview Thursday with The Associated Press. "We know we left some sales on the table in January and February."
Despite the revenue growth, the world's largest consumer electronics chain 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 the now-defunct Circuit City Stores Inc.
"We believe this environment presents a tremendous amount of opportunity, and we intend to take full advantage of those opportunities," Dunn said.
Richfield, Minn.-based Best Buy spent the fourth quarter wading through a series of internal and industry changes, offering buyouts to corporate staff before laying off workers at its corporate headquarters. And it announced Dunn's appointment.
The company trimmed store inventory so it wouldn't have to mark down items to make way for new merchandise, but the was so successful it left some shoppers searching for items they wanted.
If not for those unexpected shortages, the quarter's same-store sales might have fallen less than the 5 percent they did, executives said.
Same-store sales, or sales at stores open at least a year, are a key indicator of performance since they measure growth at existing stores rather than newly opened ones. But the figures were still ahead of forecasts. Best Buy said customer traffic fell, but the average amount shoppers were spending climbed during the period.
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 profit forecasts, which were lowered this fall 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.
"We prepared for reduced consumer spending, and we were pleased when the quarter finished stronger than it began," retiring Chief Executive Brad Anderson said in a statement.
Analysts polled by Thomson Reuters, whose estimates generally exclude one-time items, predicted earnings of $1.40 per share on revenue of $14.8 billion for the quarter
The fourth quarter performance was welcomed by investors who sent shares of Best Buy up to a six-month high in trading Thursday, before falling off slightly.
The retailer also gave a better-than-expected outlook for the full year, but also cautioned that the recession and consumer's unwillingness to shell out on some big ticket items makes some forecasts difficult.
"It has been a very volatile environment in FY '09 month by month," said Dunn. "We have no reason to believe it is not going to be any different month by month in the fiscal 2010, which is why we're going to continue to manage the business based on the sign post and opportunities we see ahead."
Best Buy now expects a 2010 profit of between $2.50 and $2.90 per share, on revenue of $46.5 billion to $48.5 billion. That assumes that about 65 new stores open during the fiscal year, with same-store sales flat to down 5 percent.
Analysts expect earnings of $2.47 per share on sales of $48.05 billion.
Citi analyst Kate McShane said the guidance was better than expected, but was surprised the company didn't forecast greater comparable sales gains as shoppers from Circuit City make their way to Best Buy stores.
For the full fiscal year, earnings dropped 29 percent to $1 billion, or $2.39 per share, from $1.41 billion, or $3.12 per share, in the previous year. Adjusted profit was $2.88 per share. Sales rose 13 percent to $45.02 billion from $40.02 billion.
Best Buy shares climbed $4.21, or 12.6 percent, to close at $37.67 Thursday.
AP Retail Writer Michelle Chapman in New York contributed to this report.