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NEW YORK – Consumer electronics retailer Best Buy Co. Inc. (BBY) Thursday reported higher fourth-quarter profits, driven by strong demand for flat-panel televisions and MP3 players, and forecast fiscal-year earnings above Wall Street targets.
The retailer, aiming to boost sales by converting stores to a “segmented” format that tailors products for specific shoppers, also said it will eliminate “redundant and non-strategic” jobs.
But Best Buy will add staff in targeted areas, like hiring more home-theater installers and adding to its “Geek Squad,” which offers technology assistance to customers.
Its shares rose 48 cents at $55 in New York Stock Exchange trading. Year to date through Wednesday, its shares have risen 25 percent.
Best Buy said earnings from continuing operations rose to $644 million, or $1.29 per share, for its fiscal fourth quarter ended Feb. 25, from $521 million, or $1.04 per share on an adjusted basis, for the comparable quarter a year ago, when it recorded an expense for stock-based compensation.
The latest results matched analysts’ expectations, according to Reuters Estimates. Last month, it forecast profit in the range of $1.25 to $1.30 per share for the quarter.
“Overall, (Best Buy) reported solid fourth-quarter results, although the bottom line was not as strong as the ‘whisper’ numbers,” said Colin McGranahan, an analyst with Sanford C. Bernstein & Co., in a research note.
The fourth quarter, which includes the bulk of the holiday shopping season and the Super Bowl — the hugely popular professional football championship game — generates the biggest portion of Best Buy’s full-year profit.
Revenue rose to $10.69 billion from $9.23 billion a year before, higher than analysts’ estimates of $10.53 billion. Sales at stores open at least a year, a key retail gauge known as comparable-store sales, rose 7.3 percent, driven by higher average purchase prices as customers snapped up flat-panel televisions.
For fiscal 2007, Best Buy said it will “redeploy resources as well as eliminate redundant and non-strategic work,” which would result in cutting jobs. It did not immediately give details.
The retailer also forecast fiscal 2007 revenue of $34 billion to $35 billion, compared with analysts’ targets of $34.2 billion and earnings of $2.65 to $2.80, including anticipated severance and related reorganization costs of 3 cents to 5 cents per share.
Analysts, on average, expected full-year earnings per share of $2.64.
Best Buy said it no longer expects to provide specific quarterly earnings forecasts, but will continue to provide annual guidance.