Many retailers have reported disappointing results this quarter. Best Buy was not one of them.
The electronics chain lived up to its name Thursday, posting sales and profits that topped Wall Street’s forecasts. The company also gave a solid outlook for the next quarter.
Shares of Best Buy surged 10% in premarket trading on the news.
Although overall sales were down for the quarter, that was expected as Best Buy’s international business was impacted by the stronger dollar and restructuring of its Canadian operations.
Revenue from its U.S. stores and online business were up in the quarter, and that appears to be what has Wall Street excited.
The first quarter is typically sluggish for Best Buy. Consumers aren’t as inclined to spend as much on electronics after doing so during the holidays.
There also don’t tend to be major new gadgets released in the quarter.
But Best Buy CEO Hubert Joly said in the earnings release that one reason why the company held up better than other retailers was because it “continued to take advantage of strong product cycles in large screen televisions and iconic mobile phones.”
Joly didn’t mention Apple by name. But it seems safe to assume that the “iconic mobile phone” he is referring to is the iPhone 6 — which has been a gigantic success for Apple. (Although Samsung did release its latest Galaxy in April as well.)
It will be interesting to hear if the company talks more about Apple during its conference call with investors.
Last month, Best Buy agreed to start accepting Apple Pay on its iOS app and will roll out the adoption of it in stores later this year.
Best Buy was not among the initial backers of Apple Pay when Apple first launched it last year.
But regardless of what Best Buy says about Apple, the latest results show that Joly’s turnaround plan for the company appear to be on the right track.
The company has faced tough competition from Amazon as well as Walmart. But since Joly took over as CEO in 2012, the company has cut costs and invested more in its online business.
Best Buy’s stock has surged since Joly took over, although much of the pop came in 2013, Shares were up 235% that year. But they fell last year and are down so far this year as well.
