Best Buy tops estimates

Minneapolis Best Buy Co. posted a 23% drop in quarterly profit on Thursday, but its adjusted results topped Wall Street estimates, helped by better-than-expected consumer demand and strong sales of mobile phones. The company noted that the quarter ended stronger than it began, indicating that consumer spending stabilized.

Best Buy reported net income of $570 million for the fourth quarter ended Feb. 28, down from $737 million a year earlier. Quarterly revenue rose 10% to $14.7 billion, helped by the opening of new stores and the inclusion of its European operations. Same-store sales fell 4.9%.

“We prepared for reduced consumer spending, and we were pleased when the quarter finished stronger than it began,” said Brad Anderson, CEO and vice chairman of Best Buy.

Best Buy said its gross profit rate improved, as sales of high-margin mobile phones helped to offset demand for lower-margin laptop computers. The chain has taken several steps to counter the recession and fend off increased competition from discounters, including cutting jobs and slowing new store openings while expanding sales of mobile phones.

In a statement, Best Buy executives portrayed the year ahead as one focused on cost cutting and an uncertain economy. However, many analysts pointed out the company should benefit from the shuttering of one-time rival elimination of Circuit City.

For the year, Best Buy expects an opening of approximately 65 net new stores, including 45 openings in the domestic segment and approximately 20 net new stores in the international segment.