Best Buy Surges as First-Quarter Earnings Hit Target

The electronics retailer forecasts flat same-store sales for the second quarter.
By Tim Arango ,

Best Buy

(BBY) - Get Report

, the nation's largest consumer electronics retailer, said Tuesday that the faltering economy drove quarterly earnings down 24% from a year ago. But the stock rose, as the numbers topped Wall Street's expectations.

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Best Buy's 2001 rally

The company, based in Minneapolis, said first-quarter earnings were $55 million, or 26 cents a share, compared with $72 million, or 34 cents a share, in the same period last year. The consensus among analysts polled by

Thomson Financial/First Call

was for the company to earn 23 cents a share. Revenue rose to $3.7 billion from $2.9 billion a year ago.

Same-store sales, which measure activity in shops open at least a year, declined 3.1% in the quarter.

The quarter was not without a bit of good news: Gross margins improved to 22.9% of sales, up 2.5 points from last year's first quarter.

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Circuit City

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, the other top consumer electronics retailer that

recently reported earnings, Best Buy blamed much of the decline on weak sales for personal computers. But Best Buy didn't appear to be as badly hurt by the PC slowdown as Circuit City, which Monday reported an 82% plunge in earnings and a 24% drop in same-store sales.

In a statement, Best Buy said comparable-store sales will be flat in the second quarter with a year ago and it expects earnings in the range of 29 cents to 31 cents, in line with current consensus estimates.

Best Buy shares rose $2.90, or 5%, to $61.10.

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