Best Buy Shares Skid on Weak Results, Gloomy Guidance

Shares of electronics retailer Best Buy (BBY) tumbled more than $6, or 15%, the biggest drop in the company's stock price in more than eight years after announcing disappointing earnings for its fiscal third quarter. The company also slashed its profit forecast for the year.

Best Buy said net profit for its fiscal third quarter was $217 million, or 54 cents per share, compared with $227 million, or 53 cents per share, in the same period a year ago. Analysts had been looking for 61 cents per share, according to Thomson Reuters. The quarter included "Black Friday," the busy shopping day after Thanksgiving, but consumers turned to other retailers like Wal-Mart Stores (WMT) and Target (TGT) for their purchases. In fact, Best Buy said domestic market share fell 1.1 percentage points in the quarter compared with a year earlier.

Revenue at the retailer was $11.89 billion, down from $12 billion a year ago and missing expectations of $12.45 billion. Sales at U.S. stores open at least one year fell 5%, with total same-store sales down 3% in the quarter.

Best Buy also said it expects full-year earnings to be between $3.20 and $3.40 per share, down from previous guidance of $3.55 to $3.70 per share. The consensus estimate is $3.59 per share.

"Based on lower than expected sales and earnings in the fiscal third quarter, and given our current visibility to potential outcomes in the fiscal fourth quarter, we now expect annual earnings to be below our previous fiscal 2011 EPS guidance," said Jim Muehlbauer, Best Buy's executive vice president of finance and CFO, in a press release. "There remains a significant amount of business still ahead of us in the holiday selling season and we don't have complete visibility to how customers will behave over the next several weeks."

The rest of the retail world seemed to fare better in November, the Commerce Department reported today. U.S. retail sales rose 0.8% last month, topping expectations for a 0.5% increase. Excluding autos, retail sales jumped 1.2%, double what economists had expected.