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Best Buy Trims Profit Targets

TSC Staff

Electronics seller Best Buy (BBY) cut its fiscal 2008 profit forecast Friday, citing lower-than-expected revenue growth in January.

Best Buy said earnings for the fiscal year ending March 1 will probably be $3.05 to $3.10 a share, whereas previously, it expected $3.10 to $3.20. In fiscal 2007, Best Buy earned $2.79.

"Our December revenue results were in line with our expectations. Soft domestic customer traffic in January, coupled with our near-term outlook, now indicate that our fourth-quarter revenue will fall short of our planned targets," said Brad Anderson, vice chairman and chief executive of Best Buy, in a prepared statement.

Shares of Best Buy fell 3.9% to $44.01 after the new targets were released.

The company, which reported a same-store sales gain of 1.5% for December, now expects comps to decline modestly for the fiscal fourth quarter. As a result, Best Buy is projecting nearly $40 billion in revenue for fiscal 2008, including an annual same-store sales increase of 2.5% to 3%, compared with previous guidance of approximately 4%.

Best Buy is predicting fiscal fourth-quarter revenue in categories such as home theater, MP3 devices, digital imaging and video gaming will come in below its prior expectations. Providing a partial offset will be higher-than-anticipated notebook computer sales.

Also, the company plans to open around 130 to 160 new stores globally during its 2009 fiscal year. Of those, 85 to 100 will be in the U.S., putting it past the 1,000-store mark.

Best Buy expects to report its final fourth-quarter and full-year results on April 2, along with more details about its expectations for fiscal 2009.