Best Buy shares fall as profit outlook misses estimates

New York: Best Buy Co Inc gave a fiscal year profit outlook that could miss Wall Street estimates as budget-conscious US shoppers show little interest in buying big-ticket items like televisions, and its shares fell nearly 6 per cent.

The largest US electronics chain, which posted its third straight quarter of same-store sales declines, also forecast a fall in same-store sales in the current quarter.

The lacklustre outlook led many analysts to question if Best Buy's strategy to focus on smartphones and other mobile broadband gadgets will be enough to combat weak demand for TVs, and boost sales over the long term. Its shares fell 4 per cent.

Best Buy, seen as a bellwether in consumer electronics, has been hurt by US shoppers showing little interest in newer technologies such as 3-D and internet-based televisions. The company is concerned about demand going forward too.

"We are fully aware that consumers are still relatively constrained, and some of our major categories are coming off challenging years," CEO Brian Dunn said on a call. "We are still assuming that some of these headwinds will continue."

Best Buy announced plans last month to open about 150 Best Buy Mobile small-format stores in the US as it looked to counter the impact of the slumping television business with a big focus on the profitable mobile business. But that has not allayed concerns about its long-term prospects.

Japan fallout

"It is very difficult for Best Buy to post positive comps when a category that is 20 per cent of their sales is comping down double digits," BB&T Capital Markets analyst Anthony Chukumba said.

For fiscal 2012, the company sees earnings of $3.30 (Dh12.11) to $3.55 a share, excluding previously announced restructuring charges and potential share repurchases. The outlook compared with the average analyst estimate of $3.56, according to Thomson Reuters I/B/E/S. It expects same-store sales of flat to a 3 per cent decline.

Best Buy said it sees same-store sales performance in the first-half, especially in the first quarter, to be similar to the fourth quarter.

Best Buy said it was not aware of any significant impact to its business as a result of the earthquake in Japan, a hub of electronic device makers. "We are in contact with our vendor partners and suppliers, but recognise that it is still too early for them to assess what impact, if any, this may have on our business in fiscal 2012," Best Buy's CFO Jim Muehlbauer said.

However, Marc Pado, US market strategist, Cantor Fitzgerald & Co, said there was some concern about popular crowd-pulling items like Apple Inc's iPad 2 being delayed due to the natural disaster in Japan. "If there are disruptions and shortages then people aren't going to go into the store," he said.

Net income fell to $651 million from $779 million a year earlier.