NEW YORK – Top U.S. electronics chain Best Buy Co. Inc. (BBY) Wednesday posted higher quarterly profit on strong sales of higher-priced digital products and forecast good holiday business, sending its stock up 4 percent.
Best Buy, based in Minneapolis, forecast third-quarter profit in line with Wall Street estimates and repeated its full-year forecast, citing strong demand for items such as notebook computers, MP3 players, flat-panel TVs and digital cameras.
Despite worries about sales growth in the second half, Best Buy said sales at stores open at least 1sts' average forecast was 52 cents, according to Reuters Estimates.
As previously reported, second-quarter revenue rose 13 percent to $6.1 billion, and same-store sales grew 4.3 percent, lagging the company's target of 5 percent to 7 percent. Federal tax rebates boosted year-earlier results, it said.
Frank Brown, an analyst at Suntrust Robinson Humphrey (search), said expense controls boosted second-quarter results. He expects falling prices to spur sales of some key digital products, benefiting the company.
Alan Rifkin, an analyst at Lehman Brothers, wrote in a research note that Best Buy remained his top pick in consumer electronics retailing as it continues to gain market share.
Brad Anderson, Best Buy chief executive, said the company has positioned itself as the "authority on digital products" due to staff expertise and improvements in its operating model.
"We believe that we are well positioned for the upcoming holiday season, given our expanded assortments in key product categories, well-trained employees and our well-known brands," said Chief Financial Officer Darren Jackson.
Best Buy forecast profit from continuing operations of 41 cents to 47 cents a share for the third quarter, and $2.80 to $2.93 a share for the full year.
Analysts' average forecasts are 44 cents a share for the third quarter and $2.90 a share for the year, according to Reuters Estimates.
Best Buy shares were up $2.01 to $52.30 and were among the top gainers on the New York Stock Exchange (search).