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By Paul Ziobro 

Best Buy Co. reported a surprise increase in its fiscal second-quarter sales, helped by a jump in its online business and an apparent gain in market share.

The Richfield, Minn., electronics chain's sales rose less than 1% at established stores, which was better than the company's projections for flat sales. The gain came during a period that the Commerce Department said overall U.S. sales at electronics and appliance stores fell 3.9%, and other retailers including Target Corp. said their electronics businesses were laggards.

Shares rose 20% to $39.23 at 4 p.m. in New York Stock Exchange trading on Tuesday. The gain, the highest among companies in the S&P 500 on Tuesday, represented the stock's largest one-day percentage increase since January 2001 and the stock's highest close since March 2015.

Results were helped by continued strength in Best Buy's digital business. Online sales rose nearly 24% compared with a year earlier. The company said it logged more visits to its website, and the average size of online orders rose. The digital business continues to offset declines in store traffic, as shoppers increasingly wait to enter stores only when ready to complete a purchase.

Best Buy isn't seeing the same slowdown in online sales growth as some others because a large share of consumer electronics have already moved to the web. The chain also has made improvements to its e-commerce business that are paying off. "It's a combination of having a big market along with making some strides in e-commerce," UBS retail analyst Michael Lasser said.

The numbers suggest Best Buy is winning market share in consumer electronics and is somewhat slowing the intrusion of online-only retailers such as Amazon.com Inc. Best Buy gets about 11% of its domestic revenue, or $4 billion last year, from online sales, a figure dwarfed by Amazon, which sells a wider assortment of merchandise and had about $100 billion from its e-commerce business last year.

Chief Executive Hubert Joly said Best Buy's online market share trails its overall share of the electronics category. But it is making gains by offering free two-day shipping on orders of greater than $35 and by sifting through online product reviews to highlight the key pros and cons.

"We don't see it as a zero-sum game," Mr. Joly said of the online business, which gives the company a chance to sell installation services along with its appliances and home-theater systems. Best Buy also has built a large business around reselling returned gadgets as "open box" or clearance items.

Another change in the quarter ended July 30 was Best Buy's decision to narrow the delivery window for major appliances to four hours. "Who wants to sit around and wait for the entire day for the appliance to show up?" Mr. Joly said, though the change caused some disruptions in the quarter.

Domestic appliance sales rose 8.2% on a comparable-store basis, the strongest category for the company though down from 21% growth in the first quarter. Home Depot Inc. and other chains also have posted strong appliance sales recently as Americans spend on renovating their homes., and the category has attracted new entrants like J.C. Penney & Co

Looking forward, Best Buy forecasts revenue will grow slightly in the second half of the year, helped by new products such as the latest Apple Inc. iPhone.

The chain's domestic business was helped in the second quarter by higher sales of wearables such as Fitbits as well as demand for television sets and appliances, offsetting declines in mobile phones and games. Chief Financial Officer Corie Barry said declines in tablet computers and mobile phones weren't as bad as initially projected for the period.

Executives also played down fears that rapid price declines for ultra high resolution televisions and more selection at retailers like Target and Wal-Mart Stores Inc. would hurt Best Buy's business significantly.

Mr. Joly said the chain's assortment, close partnership with vendors and store displays for home theater should help it perform better than the competition. Plus, prices for so-called 4K TVs have been falling for some time, as is typical with new technologies. "There's nothing new here," Mr. Joly said.

Overall, Best Buy reported a quarterly profit of $198 million, or 61 cents a share, compared with $164 million, or 46 cents a share, a year earlier. Total revenue edged up a fraction to $8.53 billion. Analysts had expected $8.4 billion in revenue.

Joshua Jamerson contributed to this article.

Write to Paul Ziobro at Paul.Ziobro@wsj.com

(END) Dow Jones Newswires

August 23, 2016 16:48 ET (20:48 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.