Musicland Changes On Cue, Posts Annual Income Drop

Musicland is changing the name of its 200-plus On Cue stores to Sam Goody.
The company says a test of the Sam Goody brand was well-received in the rural areas in which most On Cue stores are located. The conversion, set for this summer, will create efficiencies in terms of advertising and operations, Musicland says, and will give Sam Goody more than 800 stores in the U.S. An additional 30 rural-market outlets are due to open this fiscal year.

Meanwhile, the 1,321-store Musicland chain reports operating income for the fiscal year ended March 2 of $29 million, down from $77 million a year ago. Sales fell 1.5% to $1.89 million. During the quarter ended March 2, sales of movies pulled even with those of music for the first time. Lower-margin items like DVDs and video games pushed quarterly revenues to $685 million from $681 million, as operating profit fell to $66 million from $75 million.

In connection with the On Cue conversion, Musicland has reshuffled some executives. Tim Sheehan, formerly VP of retail operations, is now senior VP of stores. He reports to Musicland president Kevin Freeland and oversees field personnel, retail operations, and sales development for Sam Goody, Suncoast, and Media Play.

Replacing Sheehan is director of loss prevention John Pershing. In addition, On Cue VP Jon Estes has been promoted to VP of Sam Goody stores. Kevin Krenos, previously regional director for Media Play, is now VP of Suncoast stores. All are based at parent Best Buy's Eden Prairie, Minn., headquarters and report to Sheehan.

Best Buy reports full-year net income of $570 million, or $2.65 per diluted share, up from $396 million, or $1.86 per share, a year ago. Sales rose 27.9% to $19.6 billion. In the new fiscal year, the retailer expects earnings growth of 18%-21% and sales growth of 17%-20%. However, Best Buy shares closed yesterday down $4.47 at $75.01 as the company forecast fiscal first-quarter earnings slightly below analysts' expectations.