CHICAGO (Reuters) - Best Buy Co Inc reported an unexpected rise in first-quarter comparable sales and the No. 1 U.S. electronics retailer said it planned to save $600 million in costs by the end of fiscal 2021, sending shares to an all-time high on Thursday.
Best Buy, like home-improvement chain Home Depot Inc, has benefited as an improving job market has spurred homeowners to spend more, particularly on appliances and home theaters. In March, the U.S. 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 Inc filed for bankruptcy in March, after struggling for years with declining sales.
Shares of Best Buy, based in Richfield, Minnesota, surged as much as 16 percent to $58.50 in morning trading.
The company reported a 1.6 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 growth in sales was driven by demand for gaming and mobile products, and the arrival of delayed federal tax refund checks.
The company said it expects to build further on those gains, with second-quarter comparable sales growing 1.5-2.5 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 Thomson Reuters I/B/E/S.
Revenue climbed 1 percent to $8.53 billion, beating the average analysts’ estimate of $8.28 billion.
Reporting by Richa Naidu; Editing by Bernadette Baum