Best Buy posts 22% profit decline, but lifts forecast

Minneapolis Best Buy Co. reported Tuesday that it posted a lower-than-expected second-quarter profit, but raised its forecast for the full year based on stabilizing consumer traffic.

Best Buy’s net profit fell to $158 million in the second quarter ended Aug. 29, down 22% from $202 million in the year-ago period. The company cited weak sales on items such as videogames and cameras.

Total revenue rose 12% to $11 billion in the quarter, boosted by Best Buy Europe and the performance of new stores. Same-store sales fell 3.9% in the quarter.

In August, Best Buy said it projected sales during the upcoming Christmas shopping season to likely outpace last year's historically weak levels –- although projections were cautious based on still-slow consumer spending trends.

For fiscal 2010, Best Buy now expects same-store sales to be flat to down 2.0% and total revenue of $48 billion to $49 billion.

It had earlier forecast same-store sales flat to down 5.0% and total revenue of $46.5 billion to $48.5 billion. Analysts were expecting Best Buy to report revenue of $47.8 billion.

Other Best Buy results posted for the 2Q included a 2.0% rise in U.S. revenue to $8.3 billion as the company added a net 104 stores. U.S. same-store sales fell 3.1% as a slight increase in traffic was offset by a drop in average transaction size. Best Buy estimated it gained about 2.7 percentage points of market share as of July 31.

International revenue soared 65% to $2.7 billion, on the addition of Best Buy Europe and the new stores. But international same-store sales dropped 8.3% on the impact of currency-exchange rates and because Europe's sales figures won't be included in consolidated results for another quarter.