Best Buy shares fell 5 percent in Tuesday morning trading after the big-box retailer reported a drop in net income, missed Wall Street expectations and lowered its 2008 forecast.
The Minneapolis-based company earned $192 million or 39 cents per share, compared with $234 million or 47 cents per share in the year-ago period. Analysts had projected earnings of 49 cents per share, according to Thomson Financial.
Sales in the first fiscal quarter ended June 2 were $7.93 billion, up 14 percent from $6.96 billion last year. Best Buy opened or acquired 230 new stores since the year-ago period. Same store sales increased only 3 percent in the quarter compared to last year.
"Our first-quarter results fell short of our expectations. Strong revenue results from lower-margin products significantly cut into our gross profit rate," said Brad Anderson, vice chairman and CEO of Best Buy.
The company's China business, acquired last June, had a marked impact on the company's lower profits, according to Best Buy. In the United States, the increase of lower-margin products including notebooks and gaming hardware also contributed to the decline in margin. Home theatre product refresh cycles, resulting in markdowns of older products, also was a factor the company said.
Best Buy said it plans to earn to $2.95 per share from $3.15 per share in Fiscal 2008, off from Thomson Financial's analysts' consensus of $3.15 per share.
In morning trading, Best Buy shares were $45.76, down $2.25.
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