Best Buy profit tops views but shares off

By Karen Jacobs

NEW YORK (Reuters) - Consumer electronics retailer Best Buy Co (BBY.N: Quote, Profile, Research, Stock Buzz) posted a 7 percent drop in first-quarter profit on Tuesday, but results were better than expected as the company gained market share in televisions, computers and video gaming.

The company backed its previous full-year earnings forecast, but its shares fell 4 percent as economic concerns weighed on retail stocks. The S&P Retail Index .RLX was down 1.3 percent.

"The retail group is down today and it seems to be largely driven by the economic data points," said Scott Tilghman, an analyst with Soleil Securities. He noted reports on Tuesday showed that U.S. producer prices rose in May while housing starts fell to their lowest level in more than 17 years.

Best Buy executives told a conference call that consumers face continued uncertainty as gasoline and food prices rise but said it was looking to drive sales by meeting their needs.

"Overall we see pretty solid execution," Tilghman said. "They've worked to improve their product selection and product breadth. They've expanded their wireless presence."

Earnings came to $179 million, or 43 cents a share, for the first quarter, ended May 31, down 7 percent from $192 million, or 39 cents a share, a year earlier. Per-share earnings were helped by fewer shares outstanding.

Analysts expected 37 cents a share, according to Reuters Estimates.

Total sales rose 13 percent to about $9 billion, better than the $8.6 billion expected by analysts. Same-store sales, at outlets open at least 14 months, rose 3.7 percent overall. Same-store sales were up 3.5 percent in the United States and 4.7 percent internationally.