Best Buy 3Q sales lower than expected

MINNEAPOLIS - Best Buy reported net earnings of $217 million, or 54 cents per diluted share, for its fiscal third quarter, compared with $227 million, or 53 cents per diluted share, for the prior-year period.

“I am grateful for the hard work and dedication of our employees in the start of the holiday shopping season,” said Brian Dunn, CEO of Best Buy. “While sales were lower than we expected during the quarter, I’m pleased with our strong store execution, solid gross margin expansion and efforts to control costs. I’m confident that our employees will continue to deliver great experiences that help our customers select the best gifts for their friends and family this holiday season.”

During the fiscal third quarter of 2011, Best Buy’s revenue decreased 1% to $11.9 billion, compared with revenue of $12 billion for the third fiscal quarter of 2010. The decrease reflected a 3.3% decline in comparable-store sales, partially offset by the impact of net new stores in the past 12 months.

“Fiscal third quarter domestic sales were softer than we expected, but we were very pleased with the continued strong gross margin performance and actions to lower variable expenses,” said Jim Muehlbauer, Best Buy’s EVP finance and CFO. “Based on lower than expected sales and earnings in the fiscal third quarter, and given our current visibility to potential outcomes in the fiscal fourth quarter, we now expect annual earnings to be below our previous fiscal 2011 EPS guidance. There remains a significant amount of business still ahead of us in the holiday selling season and we don’t have complete visibility to how customers will behave over the next several weeks. However, our best view today is that we now expect annual EPS in the range of $3.20 to $3.40.”