The Minneapolis-based home-electronics retailer made $763 million, or $1.55 a share, for the quarter ended March 3, up from the year-ago $644 million, or $1.29 a share. Revenue rose to $12.9 billion from $10.7 billion a year earlier.
Analysts surveyed by Thomson Financial were looking for a $1.52-a-share profit on sales of $12.7 billion.
Same-store sales rose 5.9% from a year ago, driven by higher revenue from flat-panel televisions, video-gaming hardware and notebook computers. These gains more than offset comparable-store sales declines in tube and projection TVs, printers, CDs and desktop computing.
Gross margin fell to around 24% from 25% last year, driven by an increase of video-gaming hardware in the revenue mix and growth in the online channel, both of which carry lower margins. The gross profit rate also reflected a slightly more promotional environment in this year's fiscal fourth quarter, particularly in home theater and, to a lesser extent, music and movies. These results additionally include the impact of the Five Star business (which carries a lower gross profit rate), acquired in June 2006.
The company said it expects to make $3.10 to $3.25 a share for fiscal 2008 ending next spring, on revenue of $39 billion. Analysts were looking for a profit of $3.18 on sales of $39.8 billion.
Shares rose 37 cents early Wednesday to $49.50.