The party looks to have come to an abrupt end for Best Buy (NYSE:BBY) as it just posted weak first-quarter earnings. However, volatile consumer demand is common in the electronic retailing industry, and Best Buy remains the undisputed industry leader.

Best Buy was still able to post nearly 14% sales growth as same-store sales improved a respectable 3%. But the bottom line fell 18%, well below the 6% gain that analysts were expecting. CEO Brad Anderson explained, "Strong revenue results from lower-margin products significantly cut into our gross profit rate."

The quarterly press release also cited last June's acquisition of its China-based business as cutting into profits as it "carries a significantly lower gross profit rate." Here at home, sales of lower-margin laptop computers and video game hardware from the likes of Sony (NYSE:SNE) and Microsoft (NASDAQ:MSFT) and the latest versions of their Playstation and Xbox devices were the main culprits.

More positively, the company stated online that sales are doing well and that consumers are spending more by purchasing big-ticket items such as flat-panel televisions. Best Buy also recently started selling more Maytag appliances after the company was acquired by Whirlpool (NYSE:WHR).

But overall, the sales mix is shifting toward the lower end, causing management to reduce full-year guidance to $2.95-$3.15, down from $3.10-$3.25 previously. The market clearly didn't like the negative news -- the stock is down over 5% today.

Electronics retailing is an inherently tough industry, with razor-thin margins and hit-or-miss product cycles where merchandise can be found almost everywhere, be it Best Buy, Circuit City (NYSE:CC), or even Wal-Mart (NYSE:WMT) and Costco (NASDAQ:COST). But as it stands currently, shares of Best Buy are now more than 20% below their highs for the year and trading close to their 52-week lows. At just under 15 times forward earnings, the valuation is looking more reasonable, especially considering how Best Buy has found a way to consistently best the competition and become an industry leader.

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Best Buy and Costco are Motley Fool Stock Advisor recommendations, while Wal-Mart and Microsoft are Motley Fool Inside Value recommendations. Try any of our Fool newsletters free for 30 days.

Fool contributor Ryan Fuhrmann is long shares of Microsoft but has no financial interest in any other company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.