Best Buy posts sales gains for December

(AP) — Best Buy Co., the largest U.S. electronics retailer, saw a key sales figure rise sharply in December — compared with a plunge a year earlier — as consumers bought computers, TVs and phones for the holidays, the company said Friday.

But Best Buy didn't raise its earnings forecast, and its shares fell $1.63, or 3.9 percent, to close at $39.91 Friday. They had risen steadily in 2009 and hit a 52-week high of $45.55 on Dec. 14 but quickly pulled back.

Even though the December sales figures were strong, analysts said Best Buy's stock isn't likely to rise much during the first half of 2010 because investors are worried about increasing competition and a scarcity of must-have electronics in development.

"Wow! What a strong sales number," wrote Janney Capital Markets analyst David Strasser. But he kept his "Neutral" rating on the stock.

"We continue to believe that the stock will remain range-bound through the first half of 2010," he wrote. "Additionally, the benefit from Circuit City closures has peaked."

Best Buy has gained market share since rival Circuit City liquidated last year, and company officials said it gained December market share in the U.S., though competition from discounters and online retailers remains fierce.

Morningstar analyst R. J. Hottovy said the stock may be down because "expectations may have gotten ahead of themselves." And he said price cuts in the competitive electronics sector may have cut into Best Buy's profit margins.

December sales in Best Buy stores that had been open at least a year rose 8.2 percent, compared with a 6.5 percent drop a year earlier. That includes a 9.3 percent rise domestically and a 3.5 percent increase internationally.

Sales in stores open at least a year are a key retail measure because they exclude sales at stores that open or close during the year.

Best Buy's total sales rose 13 percent to $8.5 billion.

Consumer electronics and appliance sales were strong, movies and music weaker. Online revenue in December rose 34 percent from a year earlier as traffic grew.

Electronics were top sellers this holiday season, with spending rising 7.3 percent in December, according to data service MasterCard SpendingPulse, which estimates spending in all forms including cash.

Retailers in general saw U.S. December sales in stores open at least a year rise 2.8 percent from December 2008, according to the International Council for Shopping Centers sales index. For the full calendar year, the figure fell 2 percent.

The Minneapolis company still expects to earn $3.00 to $3.15 per share this fiscal year, excluding one-time items. Analysts expect a profit of $3.10 per share. Analyst estimates typically exclude one-time items.