NEW YORK — Best Buy reported today that its first-quarter profit fell 15 percent, even as its biggest competitor exited the market, as recession-weary shoppers cut back on items like appliances and digital cameras.
The earnings, however, beat Wall Street expectations, and the nation’s largest consumer electronics seller maintained its annual profit outlook.
Even so, shares fell 99 cents, or 2.6 percent, to $37.67 in morning trading.
Profit was $153 million, or 36 cents per share, in the quarter ended May 30. That compares with $179 million, or 43 cents per share, a year earlier as stimulus checks spurred spending.
Adjusted profit was 42 cents per share. Analysts surveyed by Thomson Reuters expected 34 cents per share.
Revenue rose 12 percent to $10.1 billion as it opened 185 new stores and gained some market share from the shuttered Circuit City Stores. The company said it had gained 2 percentage points of market share in the quarter and that its gains accelerated after the March 8 closing of Circuit City outlets across the U.S.
Circuit City’s liquidation has left about $11 billion in sales for the taking, but clearly Best Buy is facing increasing pressure from Wal-Mart Stores, the world’s largest retailer, to grab those orphan customers.
Wal-Mart is aggressively expanding its consumer electronics areas in its 3,600 stores to include higher-end brands like Sony, Apple and Dell. It’s also experimenting with interactive displays for hi-definition Blu-ray and video gaming.
Best Buy’s same-store sales fell 6 percent and the stronger dollar hurt overseas results. Same-store sales, or sales at stores open at least a year, are a key measure of a retailer’s health because they measure sales at existing stores rather than newly opened ones.
Best Buy said that the same-store sales decline was fueled by a reduction in customer traffic and a flat average ticket and reflected decreases in gaming, digital cameras appliances and movies.
Such decreases were partially offset by sales gains in notebook computers, mobile phones and repair services. Best Buy added that same-store sales of flat-panel TVs were essentially unchanged from last year as increasing TVs sold offset price declines.
However, Best Buy, which has about 22 percent of the market in consumer electronics, according to a Deutsche Bank report, is hoping that its customer service will help differentiate itself from discounters like Wal-Mart. The Bentonville, Ark.-based retailer has about 14 percent of the market, according to Deutsche.
Best Buy said it continues to project annual earnings between $2.50 and $2.90 per share. Those estimates include restructuring charges. Analysts project $2.79 per share.
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AP Retail Writer Vinnee Tong contributed to this report.
