Top U.S. consumer electronics chain Best Buy Co reported a lower-than-expected quarterly profit on Tuesday on weak sales of items such as videogames and cameras, but raised its forecast for the full year.
Best Buy, which has steadily gained market share after main rival Circuit City closed its doors early this year, also said customer traffic to its stores stabilized in the quarter.
Best Buy shares were down 1 percent at $40 in early trading.
Best Buy's net profit fell to $158 million, or 37 cents a share, in the second quarter that ended on August 29, from $202 million, or 48 cents a share, a year earlier.
Excluding a tax impact, the profit was 40 cents a share, a penny below analysts' average forecast of 41 cents a share.
The consumer electronics sector has been hit as U.S. customers spend less on nonessential items. Best Buy also faces stiff competition from Wal-Mart Stores Inc and others adding laptop computers, flat-screen televisions and similar products to their stores.
While demand for notebooks and mobile phones picked up in the all-important back-to-school season, customers still shunned gaming items, digital cameras, appliances and movies.
Total revenue rose 12 percent to $11.0 billion in the quarter, boosted by Best Buy Europe and the performance of new stores. Sales at stores open at least 14 months, or comparable store sales, fell 3.9 percent in the quarter.
Last month, Best Buy said it expected sales during the upcoming Christmas shopping season to likely outpace last year's historically weak levels. But it did not expect consumers to abandon their frugal ways.
For fiscal 2010, Best Buy now expects to earn $2.70 to $3.00 a share, excluding items, with same-store sales flat to down 2 percent and total revenue of $48 billion to $49 billion.
It had earlier forecast earnings of $2.50 to $2.90 a share, with same-store sales flat to down 5 percent and total revenue of $46.5 billion to $48.5 billion. Analysts were expecting Best Buy to report revenue of $47.8 billion and a profit of $2.86 for the period.
(Reporting by Dhanya Skariachan in Bangalore, editing by Dave Zimmerman)