Best buy profit trails analysts’ estimates on promotional costs

Best Buy Co., the world’s largest consumer-electronics retailer, reported third-quarter profit that trailed analysts’ estimates, hurt by Black Friday promotional costs. The shares fell.

Net income fell 29 percent to $154 million, or 42 cents a share, in the quarter ended Nov. 26, from $217 million, or 54 cents, a year earlier, the Richfield, Minnesota-based company said today in a statement. Excluding some items, profit was 47 cents, trailing the 51-cent average of 23 estimates in a Bloomberg survey.

Chief Executive Officer Brian Dunn opened stores at midnight Thanksgiving night, five hours earlier than last year, and discounted flat-panel televisions and digital cameras to spur sales. Gross margin narrowed to 24.2 percent from 25.1 percent a year earlier. Analysts projected 25 percent.

“Investors could stay skeptical if Best Buy’s sales are produced at the cost of meaningful gross margin declines,” Daniel Binder, an analyst at Jefferies & Co. in New York, wrote in a note to clients Dec. 9. He rates Best Buy as “hold.”

Sales by stores open at least 14 months rose 0.3 percent compared to analysts’ prediction for a decline of 0.9 percent. Total third-quarter sales increased 1.8 percent to $12.1 billion.

Best Buy fell 9.2 percent to $25.50 at 8:15 a.m. in New York. The shares had declined 18 percent this year before today.