Shares of Electronics retailer Best Buy Co. (NYSE: BBY) plunged on Tuesday that it said quarterly profit fell by 18 percent as sales of low-margin merchandise outpaced revenue from pricier products.
Net income for the company's first quarter fell to $192 million, or 39 cents a share, from $234 million, or 47 cents a share, in the year-ago period. Revenue rose 14 percent to $7.93 billion from $6.96 billion.
Analysts had expected the company to earn 49 cents per share on revenue of $7.85 billion, according to Thomson Financial.
Shares of Best Buy fell $2.83, or 5.9 percent to close at $45.18.
Same-store sales, a key retail metric which measures sales at stores which have been open at least one year, rose 3 percent.
Video-game console sales and discounts on flat-panel televisions lowered Best Buy's profit margin. Those products generated less income than technical services such as computer repairs.
The Richfield, Minn.-based company said also trimmed its full-year outlook, sending shares plummeting in Tuesday trading.
Early evidence suggests that consumer spending will be more difficult to predict this year - but it appears to be accelerating in lower-margin categories, said CFO Darren Jackson. We are confident that flat-panel TVs, gaming and notebook computers will remain very appealing to our customers.
It now expects profit for the year of about $2.95 to $3.15 a share, with same-store sales rising between 3 and 5 percent. Analysts, on average, expect Best Buy to earn $3.15 a share for the year.