Best Buy shares soared on Tuesday after the electronics retailer posted better-than expected comparable store sales and profit for the second quarter, led by a surge in domestic online revenue.
With same-store sales declining in the previous two quarters, investors had feared Best Buy’s turnaround was running out of steam. But in the second quarter, same-store sales rose 0.8%, beating analysts’ expectations of a 0.6% decline.
Best Buy’s profit rose 21% to $198 million from $164 million in the same quarter a year ago. Adjusted for one time expenses, the company earned 57 cents a share, compared to analysts’ estimates of 43 cents.
On news of the earnings, Best Buy shares rose nearly 19% to $39, the biggest one-day gain in at least a decade and the stock’s highest level since last March 2015.
“Our teams delivered a strong second quarter, with better-than-expected revenue and profitability in both our domestic and international businesses,” Best Buy CEO Hubert Joly said in a news release, noting the “continued positive momentum in our online sales.”
Domestic online revenue increased 23.7% in the second quarter to $835 million, primarily due to increased traffic, higher average order values, and higher conversion rates. Online sales as a percentage of domestic revenue increased to 10.6% from 8.6%.
As The Wall Street Journal reports, Best Buy’s digital business has offset declines in store traffic. “Best Buy isn’t seeing the same slowdown in online sales growth as some others because a large share of consumer electronics have already moved to the web,” it said, adding that the company “is somewhat slowing the intrusion of online-only retailers such as Amazon.com.”
Other retailers including Target and Wal-Mart Stores reported weak electronics sales in their most recent quarters. But Best Buy’s performance was boosted by sales of home theater systems, major appliances and computing products, as well as smartwatches.
Mobile phone sales declined but Best Buy expects they will increase this quarter, in part because of the scheduled launch next month of the iPhone 7.