Best Buy: Shoppers take advantage of tax refund checks

Markets Associated Press

Best Buy had better-than-expected sales of mobile devices and strong sales of gaming products during the first quarter, after the delayed arrival of federal tax refund checks put Americans in the mood to buy stuff.

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Shares surged nearly 17 percent Thursday to levels not seen since before the recession and the emerging dominance of Amazon.com.

For the three months that ended April 29, Best Buy Co.'s revenue climbed to $8.53 billion from $8.44 billion. That's better than the $8.26 billion analysts expected, according to a poll by Zacks Investment Research. Online sales jumped 22.5 percent domestically.

"Compared to our expectations going into the quarter, our revenue was higher due to strong performance in gaming, a better-than-expected result in mobile, and the improvement of overall sales trends due to the arrival of delayed federal tax refund checks," Chairman and CEO Hubert Joly said in a statement.

Analyst Neil Saunders, managing director of GlobalData Retail, said the numbers showed that Best Buy held its own over the period. He noted that the company did well in appliances.

"The travails of Sears, which continues to lose sales at a rapid pace, is beneficial here," he wrote, "a difficulty we believe Best Buy can capitalize on thanks to its wide assortment and visibility in the market."

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Sears Holdings Corp. reported a loss of $222 million for the first quarter as revenue fell 20 percent.

Saunders also said he believed Best Buy is in "an ideal position to inform and engage" consumers who want to know more about newer consumer technologies. "Despite the continued surge of Amazon, the most encouraging figure from today's results is that Best Buy is succeeding and growing share in the digital part of the market," he wrote.

The company earned $188 million, or 60 cents per share, for the quarter, easily topping Wall Street projections of 40 cents per share. A year earlier the Richfield, Minnesota-based company had earned $229 million, or 69 cents per share.

Best Buy now anticipates about 2.5 percent growth in full-year revenue. Its prior guidance was for approximately 1.5 percent growth. The company said that it has an extra week in fiscal 2018, occurring in the fourth quarter.

The chain expects second-quarter adjusted earnings of 57 to 62 cents per share, with revenue between $8.6 billion and $8.7 billion. Analysts surveyed by FactSet are calling for earnings of 59 cents per share. Analysts polled by Zacks foresee revenue of $8.5 billion.

Best Buy shares rose $8.50 to $58.92 in morning trading.

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Elements of this story were generated by Automated Insights using data from Zacks Investment Research. Access a Zacks stock report on BBY at https://www.zacks.com/ap/BBY

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Keywords: Best Buy, Earnings Report