Best Buy shares fall as growth predictions dip

Best Buy Co. is the latest retailer to be punished by investors even as its quarterly results outpaced projections.

Shares of the electronics retailer fell as much as 8.4 percent on Tuesday, the most since Sept. 19, as the company starts to anticipate a period of slower growth following its recent success. Best Buy’s projections for profit in the current quarter also fell short of analysts’ estimates.

“The challenge for the company, in our view, is to maintain the strong top-line results as comparisons become more difficult, especially since the stock has already re-rated meaningfully over the past year,” Scot Ciccarelli, an analyst with RBC Capital Markets, said in a research note on Tuesday. The value of Best Buy’s stock had increased by about 19 percent this year through Monday’s close.

While it’s been a solid summer for retail, with large chains’ sales buoyed by brisk economic growth, tax cuts and easing gas prices, results at companies like Best Buy and Macy’s show that Wall Street sees the pendulum at risk of swinging back again. Best Buy’s second-quarter profit, revenue and comparable-sales all outperformed estimates — but investors zeroed in on the company’s conservative projections.

Earnings will be 79 cents to 84 cents in the third quarter, excluding some items, the electronics retailer said Tuesday, trailing the 91-cent average of analysts’ estimates. The retailer also predicted slowing growth in same-store sales for the period.

The retailer expects a samestore sales increase of 2.5 percent to 3.5 percent this quarter.