Despite falling profit Best Buy holds on to electronics market

RICHFIELD, Minn. -- One year ago, the federal government's stimulus checks put extra cash in the hands of consumers, leading to higher spending. Yet the nation's biggest consumer electronics retailer still beat earnings estimates.

Profit was $153 million, or 36 cents per share, in the quarter ended May 30. That compares with $179 million, or 43 cents per share, a year earlier as stimulus checks spurred spending.

Adjusted profit was 42 cents per share. Analysts expected 34 cents per share.

"The sales environment hasn't necessarily gotten better and so it's going to be interesting to see how much Best Buy can continue to push on the gross margin and the expense line if sales deteriorate further from these levels," said Brad Thomas, an analyst with KeyBanc Capital Markets who has a "buy" rating on Best Buy shares.

"They're definitely sort of playing defense right now, but when the consumer starts to come back they're going to be in a great position," said FTN Equity Capital Markets analyst Anthony Chukumba.

Best Buy's same-store sales fell 6% and the stronger dollar hurt overseas results. Same-store sales, or sales at stores open at least a year, are a key measure of a retailer's health because they measure sales at existing stores rather than newly opened ones.