NEW YORK – Best Buy Co. Inc. (BBY), the top U.S. consumer electronics chain, Tuesday reported third-quarter profit fell on higher spending and missed analyst targets, sending its shares lower.
The retailer, which has been working to expand its business and remodel stores, reported fiscal third-quarter net income of $138 million, or 28 cents per share, compared with $148 million, or 30 cents per share a year earlier.
Analysts, on average, had been expecting it to earn 30 cents per share, according to Reuters Estimates.
Revenue rose to $7.34 billion from $6.65 billion a year ago, meeting Wall Street estimates.
Shares slid 6.6 percent to $46.55.
The company, which has been tailoring its stores to meet customer needs, said its selling, general and administrative expenses were "unacceptably high."
"We are evaluating our spending to increase the yield and will edit activities that aren't delivering results," said Brad Anderson, vice chairman and CEO of Best Buy, in a statement.
Best Buy said that for its fiscal fourth quarter, it expects earnings from continuing operations of $1.06 to $1.16 per diluted share, while analysts, on average, are currently expecting earnings per share of $1.16.
For its fiscal year ending Feb. 25, 2006, it said it continues to expect earnings from continuing operations in the range of $2.05 to $2.15 per share, compared with analysts target of $2.17 per share.
As of the close on Monday, shares of Best Buy trade at roughly 19.5 times next year's expected earnings, compared with rival Circuit City Stores Inc. (CC), which trades at 25 times, according to Reuters data. For the year, its shares have risen 26 percent, while Circuit City is up 36 percent.