Best Buy shares surge as profit beats estimates

Best Buy reported a much higher than expected quarterly profit on strength in health and wearable items such as smartwatches, and the largest US electronics retailer raised its earnings outlook, sending its shares up more than 16 per cent.

The company said it now expected low-single-digit percentage growth in fiscal-year operating income, compared with a previous forecast of “approximately flat” results.

Slight growth

“We continue to expect the slight revenue decline in the first half to be offset by slight growth in the back half,” chief financial officer Corie Barry said in a statement.

Excluding special items, the company earned 57 cents per share in the second quarter ended on July 30th.

Sales at established stores rose 0.8 per cent. Analysts had expected a 0.60 percent fall, according to research firm Consensus Metrix.

Best Buy said sales rose for home-theatre systems, major appliances and computing products, as well as smartwatches, but declined for mobile phones and gaming.

Best Buy also forecast revenue of $8.8 billion to $8.9 billion for the third quarter, while analysts on average were expecting $8.77 billion.

The company expects earnings of 43 cents to 47 cents a share, compared with Wall Street forecasts of 45 cents.

Revenue rose slightly to $8.53 billion in the second quarter, snapping a three-quarter streak of declines. Analysts on average had expected $8.40 billion.

Best Buy said net income rose to $198 million, or 61 cents per share, from $164 million, or 46 cents per share, a year earlier. – (Reuters)