Best Buy earnings miss on surprise sales weakness
By Dhanya Skariachan
NEW YORK (Reuters) - Top consumer electronics chain Best Buy Co Inc BBY.N reported lower-than-expected quarterly profit on a surprise drop in sales at established stores and a decline in its U.S. market share.
The lackluster report from the retailer seen as a bellwether in consumer electronics pushed its shares down 12.5 percent in premarket trade and cast a shadow on the strength of the recovery in the consumer-driven U.S. economy.
In its second holiday season after the bankruptcy of archrival Circuit City, Best Buy faces stiff competition from online retailer Amazon.com AMZN.O and discounters such as Wal-Mart Stores Inc WMT.N and Target Corp TGT.N.
The company said tepid demand for televisions and entertainment hardware and software contributed to its weakness in the domestic segment.
For fiscal 2011, Best Buy cut its profit outlook to about $3.20 to $3.40 a share, down from a prior forecast of $3.55 to $3.70.
In the fiscal third quarter, ended November 27, net profit was $217 million, or 54 cents a share, compared with $227 million, or 53 cents a share, a year earlier. Analysts on average forecast 61 cents a share, according to Thomson Reuters.
Sales fell 1 percent to $11.89 billion, missing analysts' average estimate of $12.45 billion. Domestic comparable-store sales declined 5 percent, hurt by lower demand in key categories and market share losses.
The company estimated its domestic market share fell 1.1 percentage points in the quarter compared with a year earlier.
Best Buy shares were down $5.20 to $36.50 in premarket trading.
Reporting by Dhanya Skariachan, editing by Gerald E. McCormick and John Wallace