Best Buy Co.’s net income climbed 18 percent to $763 million or $1.55 per share in the fourth quarter, while rival Circuit City Inc. posted a loss of $12.2 million or 7 cents per share, its third quarterly loss in two years,Bloomberg News reports.
Best Buy’s sales rose 21 percent, the most in three years, to $12.9 billion; increased gift-card sales and a well-managed drop in flat-panel TV prices also helped boost its profit.
Circuit City, which slashed TV prices to compete with rivals including Best Buy andWal-Mart Stores, saw sales rise only 1 percent, the least in three years, to $3.93 billion. Pre-tax expenses of $144.6 million, partly related to the firing of 3,400 high-paid workers, pushed the company into the red. The company plans to replace most of those employees with people willing to work for less – and, CEO Philip Schoonover said in a conference call yesterday, it plans to eliminate some management jobs.
“Best Buy is clearly out-executing Circuit City,” David Keuler, managing director at Mason Street Advisors in Milwaukee, which owns Best Buy and Circuit City shares, told Bloomberg. “They’re doing the things they should do and preparing for the future.”
