Retail electronics giant Best Buy (NYSE: BBY) on Tuesday reported a 12 percent decline in fiscal first-quarter profit, but shares jumped nearly 9 percent in morning trading as results exceeded Wall Street estimates.
Best Buy reported net income of $136 million, or 35 cents a share, in the quarter ended May 28, down from $155 million, or 36 cents a share, in the year-ago quarter. Sales were $10.94 billion, up just 1.4 percent from $10.79 billion a year ago.
(Also see: Best Buy to start offering 'Buy Back' program)
But those numbers topped consensus estimates calling for Q1 earnings of 33 cents a share on revenue of $10.7 billion.
Best Buy released first-quarter earnings early Tuesday, before the market opened. Shares climbed as high as 31.32 in morning trading, a gain of 8.7 percent over Monday's closing price of 28.82.
Investors also may have been encouraged that the No. 1 U.S. electronics retailer -- which has suffered from tighter consumer budgets, the loss of business to direct downloads and the emergence of retail competitors such as Target and Walmart -- maintained its full-year forecast of $3.30 to $3.55 a share in profit and revenue of $51 billion to $52.5 billion.
Best Buy said the decline in gross margin to 25.3 percent from 25.9 percent was due to increased promotions, higher transportation costs and "industry-wide product supply interruptions of digital imaging products due to the (March natural disasters) in Japan."
The company said while comparable store sales were down 1.7 percent versus last year's fiscal Q1, mobile-phone sales in U.S. stores soared 28 percent, while U.S. online sales rose 12 percent. Tablet and e-reader sales also were up domestically.
U.S. sales accounted for 72 percent of Best Buy's total revenue in the first quarter.
In April, Best Buy announced a new strategy to cope with the challenges to its traditional business. The company said it intends to double its current $2 billion online business in the U.S. within three to five years and to reduce its "big-box" store square footage by 10 percent in the same time frame.