MINNEAPOLIS -- Best Buy Co. shares jumped almost 20 percent Tuesday, the company's biggest one-day gain since 2001, after the company reported better-than-expected results in the May-to-July period.
The company's net profit for the second quarter of fiscal 2017 rose 21 percent, and its sales showed modest growth where it had expected none. Sales of televisions, appliances, computers, and health wearables helped offset weakness in smartphones and video games.
The shares rose $6.43, or 19.6 percent, to close Tuesday at $39.23.
In a conference call with analysts, company executives noted that tablets did not sell as poorly as had been expected. They added that Best Buy has been attracting new customers while deepening its relationship with regular customers.
"Like any space in retail, there are winners and losers," Hubert Joly, chief executive officer of Best Buy, told reporters Tuesday morning. "It is a really hard category to be successful at, and we've clearly raised the bar on ourselves. It's good to see the customers reward us."
In the three months ended July 30, the company's profit rose to $198 million from $164 million in the same quarter a year ago. Adjusted for one-time expenses, Best Buy, based in suburban Minneapolis, earned 57 cents a share, which was better than the 43 cents a share analysts were expecting and the 38 to 42 cents range the company had forecast.
Comparable sales in the U.S. rose 0.8 percent, which was better than the flat growth Best Buy had forecast. Online sales surged 24 percent, driven in part by higher conversion rates, faster shipping and better product reviews.
"In what we characterize as a solid quarter, especially given the heavily promotional July environment due to Amazon's Prime Day and Wal-Mart's steady diet of competing offers, Best Buy's online results really stand out," Charlie O'Shea, an analyst with Moody's, said in a statement.
Overall revenue was $8.5 billion in the quarter, better than the expectations and was basically flat compared to last year.
The results also stood out because Minneapolis-based Target Corp. last week cited a double-digit decline in electronic sales, and Apple products were down more than 20 percent in the company's second quarter. Those reports raised concerns about the health of the electronics industry.
Best Buy said it continues to expect no overall sales growth this year in part because of the industrywide slowdown in smartphone sales, but it said it continues to believe that sales trends will improve in the second half of the year after a slow start in the first half.
In May, Best Buy surprised investors with the announcement that Sharon McCollam, the company's chief financial officer for more than three years and a key architect of its turnaround, was stepping down as part of an early retirement. She was succeeded by Corie Barry, a Best Buy veteran who was most recently chief strategy officer.
This week, Best Buy is celebrating its 50th anniversary. Its roots date back to a store that specialized in car and home audio and which opened in St. Paul, Minn., in 1966 under the name Sound of Music. The company's name was changed to Best Buy in the 1980s.
To mark its anniversary, Best Buy opened a monthlong display in the rotunda of the Mall of America in Bloomington, Minn., on Monday that highlights some of the latest smart-home products on the market. It also has been holding anniversary sales.
Business on 08/24/2016