Best Buy Zooms Higher as 2Q Results Highlight Turnaround

By IndustriesFOXBusiness

Best Buy Earnings

Diane Macedo reports that Best Buy beat estimates with its 2Q earnings report.

Electronics retailer Best Buy (NYSE:BBY) shocked Wall Street on Tuesday by revealing a solid profit in the second quarter thanks to stronger-than-expected sales and deep cost cutting.

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Best Buy’s red-hot shares continued their torrent pace on the promising results, surging as much as 15% in premarket action to 2-1/2 year highs.

The company said it earned $266 million, or 77 cents a share, last quarter, compared with a profit of $12 million, or 4 cents a share, a year earlier.

Excluding one-time items, Best Buy said it earned 32 cents a share, up from 26 cents a year earlier. Analysts had been calling for non-GAAP EPS of 12 cents.

Revenue slipped 0.4% to $9.3 billion, topping the Street’s view of $9.13 billion. Same-store sales declined 0.6%. The company blamed the dip on short-term disruptions and floor-space optimization.

Online same-store sales jumped 10% domestically amid higher traffic and stronger average orders. When new gaming console pre-orders are included, comparable online demand soared 16%.

Best Buy said gross margins expanded to 26.5% from 24.2%, helped by a 3.5% fall in input costs. Restructuring costs tumbled to $7 million from $91 million.

“While we are clear there is much more work ahead, we have made measurable progress,” Best Buy CEO Hubert Joly said in a statement, pointing to nearly flat same-store sales, “substantive cost take outs” and three-straight earnings beats.

Wall Street cheered the latest evidence of a turnaround at Best Buy, bidding the company’s shares up as much as 15% to more than $35.00 -- a level last seen in February 2011.

In more recent action, Richfield, Minn.-based Best Buy rallied 10.80% to $34.05, putting them on track to extend their 2013 surge of 159%.