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.
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%.