April 2 (Bloomberg) -- Best Buy Co., the largest U.S. electronics retailer, said fourth-quarter profit fell less than analysts estimated on higher sales of more-expensive laptops and video-game consoles.

The chain forecast sales and profit this year that may rise more than some analysts projected. Best Buy rose 1.1 percent in trading on the New York Stock Exchange.

``Apparently the consumer still wants to spend on electronics,'' said Jon Fisher, a Minneapolis-based portfolio manager at Fifth Third Asset Management, which oversees $22 billion in assets including Best Buy. ``Best Buy has done a lot to offer more products and to make their stores more than a place to go to buy a flat-panel TV.''

Chief Executive Officer Brad Anderson is adapting store content and layouts to predominant customer types in each locale, catering more to tech geeks at one outlet and to families with kids at another. Those shifts are helping the retailer draw shoppers who otherwise are curbing non-essential spending as gas prices and food costs rise.

Higher sales of flat-panel televisions and global- positioning systems, as well as a net 137 new stores, helped offset declining revenue from tube TVs, MP3 players and DVDs in the fourth quarter, the Richfield, Minnesota-based company said.

Net income dropped 3.4 percent to $737 million, or $1.71 a share, in the three months ended March 1, the retailer said today in a statement. Twenty-four analysts estimated profit of $1.65 a share, on average.

Full-Year Forecast

Best Buy said sales for the fiscal year would be $43 billion to $44 billion, with profit of $3.25 to $3.40 a share. Analysts surveyed by Bloomberg estimated profit of $3.31, on average, on sales of $43 billion.

The forecast is a bright spot in the industry as retailers led by J.C. Penney Co. cut earnings forecasts, citing slower consumer spending. U.S. consumer confidence in March fell more than economists expected, according to a Conference Board report March 25. The Standard & Poor's 500 Retailing Index has dropped 19 percent over the past 12 months.

``Here's a retailer coming out and not guiding down,'' said Colin McGranahan, an analyst at Sanford C. Bernstein & Co. in New York. ``That's unusual.''

Mobile Phones

Best Buy plans to set up a new mobile-phone department model, with a wider selection of devices and wireless plans, at all of its U.S. stores in the next 18 months. About 180 stores have the expanded section now.

``Earnings growth in the coming year will be muted'' by investment in expansion abroad, Robert Willett, head of the company's international division, said in the statement. Best Buy, which has sites in Canada and China, also plans to open locations in Mexico and Turkey. The retailer has about 1,300 stores, about three-quarters of which are in the U.S.

Best Buy's international unit bolstered revenue 23 percent to $2.2 billion, helped by a weaker dollar and new stores.

Best Buy advanced 47 cents to $43.94 at 4:15 p.m. in New York Stock Exchange composite trading. This year, Best Buy has dropped 17 percent, and Circuit City Stores Inc., the second- biggest U.S. electronics retailer, has risen 11 percent.

Best Buy is putting more distance between itself and Circuit City, opening stores in more profitable locations. Investor Mark Wattles is pressuring Circuit City to replace its chief executive officer and directors. The Richmond, Virginia-based retailer has reported a net loss for five straight quarters.

Circuit City

Analysts favor purchasing Best Buy shares over Circuit City. Twelve analysts recommend buying Best Buy shares, 10 say ``hold,'' and 3 suggest selling. Circuit City shares are rated ``buy'' by 2 analysts, 20 say ``hold'' and 2 recommend selling.

Best Buy's fourth-quarter sales rose 4 percent to $13.4 billion, the smallest gain in at least nine years. Eighteen analysts predicted $13.2 billion, on average. Sales at stores open at least 14 months fell less than a percent.

Gross profit narrowed to 23.7 percent of revenue, from 24.1 percent a year earlier.

An International Council of Shopping Centers and UBS Securities LLC poll found 59 percent of consumers reduced or ceased spring-clothing purchases, with 34 percent citing limited budgets and 9 percent citing the economy. The survey was conducted March 27 and 30 by Opinion Research Corp.

To contact the reporter on this story: Mark Clothier in Atlanta at mclothier@bloomberg.net

Last Updated: April 2, 2008 16:29 EDT