NEW YORK – Best Buy Co. Inc. (BBY), the No. 1 U.S. electronics chain, Tuesday reported its quarterly profit jumped 85 percent, handily topping Wall Street estimates, on strong sales of MP3 music players, digital TVs and video games and fewer sales promotions.
Shares of Best Buy (search), which reported better-than-expected profit margins, rose 6 percent in pre-market trade.
Profit surged to $170 million, or 51 cents a share, for the first quarter ended May 28, compared with $92 million, or 28 cents a share, a year earlier.
Analysts had estimated a profit of 30 cents a share, according to Reuters Estimates. The company had on April 1 had forecast earnings of 27 cents to 32 cents a share, including stock-based compensation expense of 5 cents a share.
Best Buy said it gross margins improved even as it spent money improving stores and customer service to distance itself further from discounters like Wal-Mart Stores Inc. (WMT).
The retailer said the higher margins reflected a more modest promotional environment, speedier introduction of new product models, improved pricing from vendors, improved global sourcing, and increased stocking of profitable private label merchandise.
Best Buy raised its earnings forecast for the fiscal year ending February 2006 to a range of $3.10 to $3.25 a share, up from a prior forecast of $2.95 to $3.10 a share.
The company said it continues to expect revenue for the fiscal year of about $30 billion, and growth in sales at stores open at least 14 months of 4 percent to 5 percent.
Shares of Best Buy jumped $3.88 to $63.00 in pre-market trade on the Inet electronic brokerage, up from a close of $59.12 on Monday on the New York Stock Exchange.