Best Buy Shares Jump as Online Sales Climb

Best Buy Co. reported an unexpected increase in profit for the second quarter as it benefited from a jump in online revenue, sales growth in some consumer electronics and lower expenses.

Shares climbed 14% to $37.50 in premarket trading.

Same-store sales rose 0.8%. The company had projected same-store sales roughly flat with the year-ago second quarter while analysts polled by Consensus Metrix had expected a 0.6% decline.

Sales at Best Buy have struggled to grow recently in part because people have been buying fewer consumer electronics. Sales at electronics and appliance stores fell 3.9% in the second quarter, according to the Commerce Department.

But for the three months ended in July, Best Buy said its domestic segment was helped as growth in health wearables, home theater, major appliances and computing, which helped offset declines in mobile phones and gaming. Also, domestic online revenue rose about 24% due to increased traffic, higher average orders and better conversion rates.

In its much smaller international segment, revenue declined 1%, hurt by foreign exchange. Excluding those effects, revenue increased 4.1%, driven by growth in Canada and Mexico.

Over all, Best Buy reported a profit of $198 million, or 61 cents a share, compared with $164 million, or 46 cents a share, a year ago.

Excluding items, the company earned 57 cents a share. The company guided for earnings between 38 cents to 42 cents. Analysts, in a Thomson Reuters poll, expected 43 a cents a share. Revenue edged up 0.1% to $8.53 billion, while analysts expected $8.4 billion.

Selling, general and administrative expenses fell 2.1% from a year ago, and the company also paid a lower income tax bill.

For the current period the company expects per-share earnings between 43 cents and 47 cents a share, in-line with the consensus estimate of 45 cents a share.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

August 23, 2016 08:15 ET (12:15 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.