MINNEAPOLIS _ Best Buy Co. shares jumped 19 percent, the biggest-one day gain in at least a decade, Tuesday morning after the company reported better-than-expected results in the May-to-July period.
The company's net profit rose 21 percent and its sales showed modest growth where it had expected none. Sales of TVs, appliances, computing, and health and wearables helped offset weakness in smartphones and video games.
The company's shares boomed upward through the morning. At midday, its share price neared $39, its highest level since last March 2015. Analysts in recent months had grown increasingly skeptical about Best Buy's turnaround.
In a conference call with analysts, company executives also noted that tablets did not perform as badly as had been expected. They added that Best Buy has been attracting new customers while deepening their relationship with regular customers.
"Like any space in retail, there are winners and losers," chief executive Hubert Joly told reporters Tuesday morning. "It is a really hard category to be successful at and we've clearly raised the bar on ourselves. It's good to see the customers reward us."
In the three months ended July 30, the company's profit rose 21 percent to $198 million from $164 million in the same quarter a year ago. Adjusted for one time expenses, Best Buy, headquartered in suburban Minneapolis, earned 57 cents a share, which was better than the 43 cents a share analysts were expecting and the 38 to 42 cents range the company had forecast.
Comparable sales in the U.S. rose 0.8 percent, which was better than the flat growth Best Buy had forecast. Online sales surged 24 percent, driven in part by higher conversion rates, faster shipping and better product reviews.
"In what we characterize as a solid quarter, especially given the heavily-promotional July environment due to Amazon's Prime Day and Walmart's steady diet of competing offers, Best Buy's online results really stand out," Charlie O'Shea, an analyst with Moody's said in a statement.
Overall revenue was $8.5 billion in the quarter, better than the expectations and was basically flat compared to last year.
The results stood out in that Minneapolis-based Target Corp. last week cited a double-digit decline in electronic sales, and particularly that Apple products were down more than 20 percent in its second quarter. That call out raised heightened concerns about the health of the electronics industry.
Best Buy said it continues to expect no overall sales growth this year amid the industrywide slowdown in smartphone sales, but it said it continues to believe that sales trends will improve in the second half of the year after a slow start in the first half.
In May, Best Buy surprised investors with the announcement that Sharon McCollam, the company's chief financial officer for more than three years and a key architect of its turnaround, was stepping down as part of an early retirement. She was succeeded by Corie Barry, a Best Buy veteran who was most recently chief strategy officer.
This week, Best Buy is celebrating its 50th anniversary. Its roots date back to a store that specialized in car and home audio and which opened in St. Paul in 1966 under the name Sound of Music. The company's name was changed to Best Buy in the 1980s.
To mark the birthday, Best Buy opened a month-long display in the rotunda of the Mall of America on Monday that highlights some of the latest smart home products on the market. It also has been holding a number of anniversary sales.
