Company of Interest: Best Buy Co.

Best Buy Co., the nation’s largest consumer electronics retailer, lowered its 2008 profit estimate yesterday. It blamed a softening economy that’s steering shoppers away from high-margin items such as flat-screen TVs.

The company also reported that first-quarter earnings fell 18 percent, partly in response to the inclusion of the company’s new lower-margin business in China.

Shares slid $2.83, or 5.9 percent, to $45.18 in trading on the New York Stock Exchange.

Profit for the quarter that ended June 2 dropped to $192 million, or 39 cents per share, from $234 million, or 47 cents per share, in the same period a year ago.

Revenue rose 14 percent to $7.93 billion from $6.96 billion last year. The revenue increase included the addition of 230 new stores, including 131 through acquisitions.

Analysts polled by Thomson Financial expected a profit of 49 cents on revenue of $7.85 billion.

Same-store sales, or sales in stores open at least 14 months, grew 3 percent during the quarter. Same-store sales is considered a key gauge of retail industry performance because it measures growth from established stores rather than growth from newly opened ones.

“We’re never satisfied with missing earnings,” Chief Executive Officer Brad Anderson told analysts during a conference call.

“However, we know it does not reflect the core health of our business,” he said.

Anderson said weakness in the overall economy was a major factor in the company’s sales skewing away from high-margin, big-ticket products. A growing amount of its sales is coming from such items as notebook computers and gaming hardware, which don’t bring as much profit.

Best Buy cut its fiscal 2008 profit outlook to a range of $2.95 to $3.15 per share, down from its earlier projection of $3.10 to $3.25 a share. The company retained its annual revenue guidance of about $39 billion.

Chief rival Circuit City Stores Inc., which is based in Henrico County, plans to release its first-quarter results this morning.

ILLUSTRATION: CHART

MEMO: EARNINGS

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