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Best Buy Co., the largest U.S.
electronics retailer, said Tuesday second-quarter results fell
below expectations as sales at established stores fell.


      The results sent shares down 33 cents to $40.08 during premarket
trading, even though the retailer raised its guidance for the year
based on stabilizing customer traffic.


      Profit for the three months ended Aug. 29 fell 22 percent to
$158 million, or 37 cents per share, from $202 million, or 48 cents
per share last year, hurt by higher expenses and the stronger
dollar. Analysts polled by Thomson Reuters, on average, predicted a
profit of 42 cents per share.


      Revenue rose 12 percent to $11 billion, boosted by gains from
adding 170 net new stores in Europe over the past 12 months. That
was offset by a 3.9 percent decline of sales at established stores
and the drag of the stronger dollar, which hurts international
revenue because sales translate back into fewer dollars.


      Top sellers were notebook computers, phones and flat-panel TVs,
offset by weakness in gaming, digital cameras, music and movies.


      The company has gained market share because of the closing of
Circuit City stores but has been hurt by the cutback in consumer
spending amid the recession. Best Buy said it added 2.7 percentage
points of market share in the quarter.


      The company said during the quarter profit was pressured by new
initiatives to drive traffic into the stores "intended to
capitalize on competitive opportunities." Its gross profit rate
was also hurt by the launch of the new iPhone.


      Analysts predicted a profit of 42 cents per share on revenue of
$10.79 billion.


      The company now expects earnings of $2.70 to $3 for the year, up
from between $2.50 and $2.70. Analysts predict $2.87.
      

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The electronics retailer says profit fell 22 percent to $158
million, or 37 cents per share, from $202 million, or 48 cents per
share last year, hurt by higher expenses and the stronger dollar.

Best Buy 2nd quarter misses expectation

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