Best Buy's fourth quarter: Strong earnings, mixed demand picture

Summary:Best Buy reported strong fourth quarter earnings, but many of its categories---consumer electronics, home office and entertainment hardware and software---are sucking wind. The one growth area: Services like repair, extended warranties and installation.

Best Buy reported strong fourth quarter earnings, but many of its categories---consumer electronics, home office and entertainment hardware and software---are sucking wind. The one growth area: Services like repair, extended warranties and installation.

The electronics retailer reported fourth quarter earnings of $651 million, or $1.62 a share, on revenue of $16.25 billion, down from $16.55 billion a year ago. Non-GAAP earnings were $1.98 a share. Wall Street was expecting earnings of $1.85 a share on revenue of $16.3 billion.

For fiscal 2011, Best Buy reported earnings of $3.08 a share on revenue of $50.3 billion, up 1 percent from a year ago. Online revenue for fiscal 2011 was up 14 percent from a year ago to $2.5 billion.

As for the outlook, Best Buy projected fiscal 2012 revenue of $51 billion to $52.5 billion. Same store sales will be flat to a decline of 3 percent and earnings will be about $3.28 a share to $3.53 a share. Non-GAAP fiscal 2012 earnings will be $3.30 a share to $3.55 a share. Wall Street was expecting earnings of $3.56 a share on revenue of $52.13 billion.

Despite the solid results, the demand picture is a bit mixed. Among the key points:

  • Same store sales were down 4.6 percent in the fourth quarter.
  • Entertainment software and hardware sales in the U.S. and TVs had a "low double-digit decline." Best Buy said "consumer demand in new television technologies had not yet emerged as a significant revenue driver."
  • Laptop sales were down in the fourth quarter in mid-single digits due to tough year ago comparisons because of the Windows 7 upgrade cycle. Sales of tablets offset some of those declines.
  • Mobile phones and smartphones had low double-digit sales increases.

Topics: Banking, Enterprise Software

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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