Best Buy Posts Lower Profits, But Tops Outlook

December 16, 2008 2:01 p.m. EST

Minneapolis, MN (AHN) - Best Buy Co. announced Tuesday third quarter earnings fell due to an impairment charge and declining same-store sales. However, strong Thanksgiving weekend sales helped the company top estimates.

The electronics retailer posted third quarter earnings of $52 million or 13 cents a share, compared to $228 million or 53 cents a share in the same period a year ago.

The company took a $111 million charge for losses related to investments in The Carphone Warehouse Group PLC. Excluding that charge, Best Buy earned 35 cents a share.

The result was well ahead of analyst estimates for 24 cents a share, according to Thomson Reuters.

Revenue rose to $11.5 billion, up 16 percent from $9.93 billion last year. However, the company posted a 5.3 percent decline in same-store sales in the third quarter.

Best Buy said as of Dec. 15, 2008, the majority of its corporate employees became eligible for voluntary separation packages as the company aims to reduce its corporate expense structure.

"We view our employees as the primary strength of this organization," said CEO Brad Anderson. "However, based on the recent changes we've seen in consumer behavior and the potential for worsening consumer spending, we need to prepare our organization to operate in a wide range of potential macro economic scenarios in the coming year."

Best Buy reaffirmed its full-year earnings guidance of $2.30 to $2.90 a share on a 1 percent to 5 percent drop in same-store sales.

Shares of Best Buy rose on Tuesday, trading 15 percent higher to $27.10 in midway through the session.