(Bloomberg) – Best Buy Co., the world’s largest consumer-electronics retailer, reported first-quarter profit that rose less than analysts projected as some U.S. shoppers bought fewer games and movies. The shares fell as much as 7.6 percent.
Earnings increased to 36 cents a share, Best Buy said today. Analysts on average projected 50 cents, according to estimates compiled by Bloomberg. Sales at U.S. stores open at least 14 months rose 1.9 percent, trailing the median estimate of 3.5 percent in a Bloomberg survey of five analysts.
U.S. comparable-store sales of televisions, music, films and gaming merchandise fell, eating into gains from notebook computers and mobile phones. Selling, general and administrative costs climbed 12 percent, eroding profit.
“They were planning expenses for higher comparable store sales and when they didn’t materialize, that drove a bigger earnings miss,” Matt Arnold, an analyst at Edward Jones & Co. in Des Peres, Missouri, said today by telephone. He advises investors to hold on to the shares.
Best Buy, based in Richfield, Minnesota, fell $2.83 to $38.22 at 10:23 a.m. in New York Stock Exchange composite trading. Earlier the shares dropped as low as $37.93, the most in more than a month.
Total comparable-store sales rose 2.8 percent, with an international gain of 6.3 percent. The U.S. accounts for almost three-fourths of Best Buy’s revenue.
Chief Executive Officer Brian Dunn is looking to lure shoppers as they start spending again during the economic recovery. Purchases at U.S. retailers unexpectedly dropped last month, according to Commerce Department figures, signaling that consumers are saving more.
Missing Expectations
“While our financial results in the fiscal first quarter were below expectations, we remain confident that the strategic investments we are making will deliver more robust connected solutions for customers and support increased margin expansion,” Chief Financial Officer Jim Muehlbauer said in a statement.
Profit in the quarter ended May 29 climbed to $155 million from $153 million, or 36 cents a share, a year earlier. The company also reiterated that full-year profit probably will be $3.45 to $3.60 a share.
(Best Buy began a conference call at 10 a.m. New York time to discuss results. To listen, visit {LIVE }.)
–Editors: Julie Alnwick, Jennifer Sondag
To contact the reporter on this story: Chris Burritt in Greensboro, North Carolina, at cburritt@bloomberg.net.
To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net.

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