Top U.S. electronics chain Best Buy Co reported a higher-than-expected quarterly profit, but its shares fell after it said gross margins in the current holiday quarter would be lower than it had expected.

Shares of the company fell 3.6 percent in premarket trading.

The retailer's margins have come under scrutiny as investors are concerned its efforts to woo shoppers through aggressive promotions and discounts could weigh on its margins.

Net profit rose to $227 million, or 53 cents a share in its third quarter that ended on November 28, from $52 million, or 13 cents a share, a year earlier.

Revenue rose 5 percent to $12.02 billion.

Analysts on average were expecting a profit of 43 cents a share, according to Thomson Reuters I/B/E/S.

Best Buy said it expected improved revenue for the fourth quarter, but that it would be driven by lower-margin products like notebook computers and lower-priced flat screen televisions.

Electronics Fall