Best Buy reported an unexpected rise in first-quarter comparable sales, and the No. 1 US electronics retailer said it planned to save $600 million in costs by the end of fiscal 2021, sending shares to an 11-year high Thursday.
Shares of the company surged as much as 15 percent to $57.95 in morning trading.
The Richfield, Minnesota-based Best Buy, like home improvement chain Home Depot, has benefited as an improving job market has spurred homeowners to spend more, particularly on appliances and home theaters. In March, the US unemployment rate dropped to a near-10-year low.
Chief Executive Hubert Joly, speaking on a conference call, said Best Buy was “very mobilized” to maximize its gains from a competitor filing for bankruptcy during the quarter. Joly did not name the competitor.
“We believe we’re seeing some lift in the sales in the stores, of course, around (the competitor’s) locations in appliances and home theater,” said Joly, adding the rival company had about a 20 percent overlap with Best Buy’s stores.
Electronics retailer hhgregg filed for bankruptcy in March, after struggling for years with declining sales.
Best Buy reported a 1.6 percent rise in first-quarter sales at stores open for more than a year, against analyst expectations for a decline of 1.5 percent, according to research firm Consensus Metrix.
Joly said the unexpected gain in sales was driven by demand for gaming and mobile products, and the arrival of delayed federal tax refund checks.
Best Buy said it expects second-quarter comparable sales to grow 1.5 percent to 2.5 percent.
“We expect Best Buy to continue to perform at a high level across multiple categories, with appliances likely to be one of the bright spots given market dynamics,” Moody’s retail analyst Charlie O’Shea wrote in a note.
Net income fell to $188 million, or 60 cents a share, in the three months ended April 29, handily topping the average analyst estimate of 40 cents per share, according to…