BBY Best Buy Company

By Imani Moise 

Best Buy Co.'s sales jumped in the latest quarter as the electronics retailer continued to benefit from shoppers spending more freely, but shares fell Thursday as some investors feared there might not be much more room to run.

Same-store sales increased 7.1%, which Chief Executive Hubert Joly attributed to higher consumer confidence and new products. Consumer confidence, as measured in one index, reached a 14-year high earlier this year and remained strong in May, signaling more spending for the months ahead.

"This strong performance was broad-based, with positive comparable sales across all channels, geographies and most of our product categories," Mr. Joly said.

Best Buy's shares have climbed 47% over the past year compared with the S&P 500's 14% gain, but tumbled 6.7% to $70.85 during morning trading after the company decided not to raise its annual guidance despite reporting first-quarter earnings that blew past expectations.

The company continues to expect comparable sales to be flat to up 2% for the year, which given the first quarter's strong results could mean negative comparisons in the back half of the year, according to a Wells Fargo research note.

Additionally, Chief Financial Officer Corie Barry said on a call with analysts that higher investments in the company's supply chain and higher transportation costs will squeeze margins for the rest of the year.

Growth in consumer spending has given a much-needed boost to traditional retailers who are trying to fend off growing competition from online merchants. Walmart Inc., Target Corp. and Macy's Inc. all reported rising same-store sales for the latest quarter.

Best Buy has been fortifying its e-commerce program and expanding services like tech support and in-home advisory to boost sales. During the quarter the company unveiled a partnership with Amazon.com Inc. to sell televisions equipped with Amazon's Fire TV operating systems both in store and online on Amazon's marketplace.

U.S. online sales grew 12% to $1.14 billion, but Mr. Joly said the lines between online and in-store sales are becoming increasingly blurred as customers opt to shop online and pick up items in store or use a new mobile feature that allows shoppers to scan and instantly compare prices while shopping in store.

In the future, he says "reporting online sales separately may or may not make sense."

Overall for the first quarter, the Minneapolis-based company reported a profit of $208 million, or 72 cents a share, up from $188 million, or 60 cents a share, a year earlier. On an adjusted basis, earnings rose 37% to 82 cents a share. Revenue rose 6.8% to $9.12 billion. Analysts polled by Thomson Reuters had forecast earnings of 74 cents on $8.74 billion in sales.

Write to Imani Moise at imani.moise@wsj.com

(END) Dow Jones Newswires

May 24, 2018 11:58 ET (15:58 GMT)

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