(Adds that stock hit record peak)
By Richa Naidu
CHICAGO May 25 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
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
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
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)