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MINNEAPOLIS-Consumer electronics giant Best Buy Inc. has posted strong third-quarter (ended Nov. 27) earnings, which came in at $0.45 per share, or $148 million, an increase of 22% compared with $0.37 per share, or $122 million, for Q3 2003. This was a penny per share over Thompson First Call analysts’ projections, and news of the good financials caused Best Buy shares to spike upward more than 5% on Wednesday.

These numbers followed last week’s report of Q4 revenue increases of 10% to $6.65 billion, compared with a year earlier, which reflected the addition of 75 new stores in the past 12 months, and a comparable store sales gain of 3.2% over Q3 2003.

“The driver of these results was the improvement in our expense rate,” said Brad Anderson, vice chairman and CEO of Best Buy at Wednesday’s earnings conference call. “We’ve been focused on driving efficiencies for several years, and this is more evidence that our work is yielding results. Also, we’re continuing to gain market share, which is evidenced by our comparable-store sales gains, which is larger than that of our competitors. Retailers across the country reported disappointing customer traffic, particularly in November, yet we succeeded in growing our business this quarter.”

Anderson added that the company performed well in the realm of digital technologies. “Given how much our customers love new technology, we did well with digital TVs, digital imaging, and MP3 players, and we also gained share in notebook computers and especially major appliances,” he said.

The compan’s experiment in segment marketing, in which some of its stores concentrate on a particular demographic (families, young men, and so on), continued apace in the third quarter. Currently, Best Buy has 67 segmented stores out of a total of 820 across North America. According to the company, the segmented stores collectively had a com-store sales gain this quarter of more than double that of other U.S. Best Buy stores.

Best Buy’s Canadian operations, Future Shop and Best Buy stores, also had a good quarter. “Revenue growth in Canada was driven by market share gains, the opening of new stores, and our 5% comparable-store sales gain for the quarter,” says Allen Lenzmeier, president and COO.

The company expects its strength to continue to the finish of the holiday sales season, and into 2005. “Month-to-date revenue is on track with our expectations,” says Darren Jackson, EVP and CFO. “We believe that our highest volumes are still ahead of us, and consumers seem to shop later every year. We expect a comparable store sales gain of 3% to 5% for both fiscal December and the fourth quarter. We also anticipate opening about 10 stores in the fourth quarter.”

Best Buy also updated its earnings guidance for fiscal 2005. The company said it expects revenue for fiscal 2005 to be about $27.5 billion, an increase of 12%. This 2005 guidance assumes the opening of a total of about 77 new stores during the year, a gain in comparable store sales of 4% to 5% for the fiscal year, and a modest improvement in operating income.

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