Retail giant Best Buy has released the results of its third quarter financials, showing a strong gain in its entertainment software division, led by sales of current and next-gen console hardware.
Best Buy reported profits of $150 million for its third quarter, a growth of 24 percent over the previous three quarters to a total of $614 million versus $496 million the prior year. Revenue for the retailer was up 16 percent to $8.5 billion.
However, the company missed estimates, with only a small increase over the $138 million profit in last year's comparable quarter, and Best Buy shares slid over $2 to $51.66 in mid-market trading.
The company attributed 17 percent of its third quarter revenue to its entertainment software group, which saw a double-digit gain in video game sales, albeit offset by a comparable decline in sales of music CDs. This gain, it said was driven by sales of current platforms like the PlayStation 2 and Xbox 360, but also by the recent launches of the PlayStation 3 and Nintendo Wii.
Apart from game sales, Best Buy also noted the addition of Magnolia Home Theater experience to 136 U.S. Best Buy locations, as well as expanded television departments in 89 of its U.S. stores, and saw a 51 percent revenue gain in its international markets, including Five Star operations in China, and a 13.7 percent store sales gain in its Canadian market.
Said Best Buy CEO Brad Anderson, "While a very competitive climate put pressure on our margins, resulting in earnings below our original expectations, I continue to support the strategic choices we made. The market share gains we saw, and the new customers we acquired, give us momentum as we begin our fourth quarter, which generates the largest percentage of our earnings for the year."