Best Buy Co Inc (NYSE:BBY), the largest U.S. consumer electronics retailer, reported a better-than-expected profit as cost cutting paid off and revenue increased after seven quarters of decline.
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Best Buy shares were up nearly 10 percent in heavy trading before markets opened.
The company said selling, general and administrative expenses fell about 5 percent in the third quarter ended Nov. 1. Operating margins doubled to 2 percent of total revenue.
Best Buy has removed layers of management, cut jobs, shut stores and boosted cash reserves since 2012 under its Renew Blue initiative, spearheaded by Chief Executive Hubert Joly, in an effort to make up for slowing sales.
The company has been facing intense competition from online retailers such as Amazon.com Inc <AMZN.O> as customers increasingly choose to shop online for appliances and items such as smartphones and laptops.
Best Buy's U.S. business showed signs of recovery in the third quarter as revenue increased 2.3 percent to $7.99 billion, driven by high demand for televisions, appliances and computers. U.S. same-store sales grew 3.2 percent — the first growth in four quarters.
Total same-store sales increased 2.2 percent, compared with a 2 percent decline estimated by analysts polled by research firm Consensus Metrix.
Total revenue rose slightly to $9.38 billion from $9.32 billion.
Net income attributable to Best Buy shareholders nearly doubled to $107 million, or 30 cents per share, from $54 million, or 16 cents per share, a year earlier.
Excluding items, the company earned 32 cents per share.
Analysts on average had expected a profit of 25 cents per share on revenue of $9.33 billion, according to Thomson Reuters I/B/E/S.
The company's tax rate fell to 39.4 percent in the third quarter from 44.4 percent a year earlier.
Best Buy said it expects "near flat" revenue and comparable sales for the current quarter as sales of consumer electronics devices such as mobile phones fall.
The company's shares have fallen 11 percent this year through Wednesday's closing of $35.54 on the New York Stock Exchange.
(Reporting by Ramkumar Iyer in Bangalore and Nandita Bose in Chicago; Editing by Joyjeet Das)