Best Buy profit, sales top estimates

 NEW YORK (MarketWatch) — No. 1 U.S. electronics retailer Best Buy Co. said Tuesday that its fiscal first-quarter profit fell 12 percent, hurt by increased promotions and lower demand for items including flat panel televisions and digital cameras.

Still, its shares jumped 6.1 percent in premarket trading after its profit and U.S. same-store sales declined at a slower pace than analysts were looking for. Best Buy stock has fallen 16 percent this year in part amid increased concern about competition from its online rivals.

Net income dropped to $136 million, or 35 cents a share, from $155 million, or 36 cents, a year earlier. Sales in the quarter ended May 28 rose 1.4 percent to $10.9 billion.

The company kept its full-year outlook for adjusted profit of $3.30 to $3.55 a share. It sees sales to be at the higher end of its previously guided range of $51 billion to $52.5 billion.

Analysts surveyed by FactSet estimated the Richfield, Minn.-based retailer to earn 33 cents a share on sales of $10.7 billion in the first quarter and $3.46 a share for the year. Best Buy shares jumped 6.1 percent in premarket trading.

Comparable sales, or sales at Best Buy stores, call centers and Web sites operating at least 14 months, fell 1.7 percent, including a 2.4 percent decline in the U.S., because of lower sales of TVs, digital cameras and CDs and DVDs.

Analysts were looking for a U.S. sales drop in the range of 3 to 5 percent.

Among the bright spots, however, domestic online sales rose 12 percent while domestic mobile-phone comparable sales jumped 28% with connections increasing 20 percent. Tablet computers, digital book readers, appliances and services also saw higher demand.

Outside of the U.S., comparable sales rose 0.4 percent, helped by the company’s Five Star business in China. Europe and Canada both saw lower sales.

Gross margin, or percentage of sales left after minus the cost of goods sold, narrowed to 25.3 percent from 25.9 percent, hurt by increased promotions, higher transportation costs and supply chain interruptions of digital cameras from the fallout of the March 11 quake in Japan.

Selling, general and administrative expenses dropped to 22.7 percent of sales from 23 percent.