Best Buy (BBY) cited a weak consumer environment for a decline in fourth-quarter sales on Thursday, however investors cheered as the retailer beat profit expectations and accelerated cost cuts.
The Richfield, Minn.-based consumer electronics retailer reported net earnings of $310 million, or 88 cents, compared with a year-earlier loss of $461 million, or $1.36 a share.
Adjusted for one-time items, Best Buy said it earned $1.24 a share, topping average analyst estimates of $1.01 in a Thomson Reuters poll.
Fueling the bottom-line beat was a bigger-than-expected $765 million reduction in costs.
Best Buy also said it gained market share during the quarter amid efforts to be price competitive and “materially offset” promotions with “substantial cost savings.”
Shares of Best Buy were up 6% to $25.82 in pre-market trade.
However, the company warned that economic concerns will likely lead to industry declines in the consumer electronics category. It warned investors to expect revenue and same-store sales to remain “slightly negative.”
Revenue for the three months ended Feb. 1 was $14.47 billion, down from $14.92 billion a year ago and missing the Street’s view of $14.66 billion. Same-store sales, a key growth metric of sales at stores open longer than a year, slumped 1.2%.
“The fourth quarter was an environment of declining retail traffic, intense promotion, fewer holiday shopping days and severe weather,” Best Buy CEO Hubert Joly said in a statement.