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(Sharecast News) - Best Buy shares rose on Thursday after the US electronics retailer reported stronger-than-expected first-quarter results and forecast better-than-anticipated comparable sales for the current quarter, supported by demand for gaming, computing, mobile phones and services.
Revenue rose to $8.94bn in the 13 weeks ended 2 May from $8.77bn a year earlier, ahead of the $8.83bn expected by analysts in an LSEG survey cited by CNBC.
Comparable sales increased 2.0%, compared with a 0.7% decline a year earlier, and ahead of expectations for about 1% growth cited by Reuters.
Net earnings increased to $276m, or $1.31 per diluted share, from $202m, or 95cents per share, a year earlier.
Adjusted diluted earnings per share rose 11% to $1.28, ahead of Wall Street expectations of $1.23 cited by CNBC and Reuters.
Chief executive Corie Barry said: "Today we are pleased to report better-than-expected results for the first quarter.
"Our comparable sales grew 2% versus last year, higher than our outlook, with positive comps across the majority of our major product categories and strong performance in our Best Buy Ads and Marketplace initiatives.
"We also drove operating income rate expansion and EPS growth."
Domestic revenue rose 1.5% to $8.25bn, driven by comparable sales growth of 1.8%.
Best Buy said the largest contributors to domestic comparable sales growth were gaming, computing, mobile phones and services, partly offset by weakness in appliances.
Domestic online revenue rose 1.4% on a comparable basis and remained flat as a share of domestic revenue at 31.7%.
International revenue increased 7.3% to $687m, supported by comparable sales growth of 4.7% and favourable foreign exchange movements.
International gross margin fell to 21.5% from 22.0%, mainly because of lower product margin rates.
Best Buy's enterprise operating margin improved to 4.1% from 2.5%, while adjusted operating margin expanded to 4.1% from 3.8%.
The domestic gross margin edged up to 23.7% from 23.5%, helped by growth in Marketplace and Best Buy Ads, and improved performance in traditional services, partly offset by lower product margin rates.
The results came as Best Buy looked to revive sales after a prolonged slump, with consumers remaining selective on big-ticket purchases amid inflation, higher fuel costs and broader economic uncertainty.
Reuters said demand was supported by products including the Nintendo Switch 2, PlayStation 5 and Xbox consoles, AI glasses and health wearables.
Best Buy also confirmed a leadership transition, with Barry stepping down as CEO later this year and Jason Bonfig, currently chief customer, product and fulfilment officer, taking over on 1 November.
Barry said: "With this momentum, I believe it is the right time to transition the leadership of Best Buy, and step down as CEO later this year."
Bonfig said his priorities would include advancing Best Buy as a retail, media, advertising and technology company, expanding its reach, improving the customer experience and maintaining a human-powered, customer-focused approach.
The company reiterated its full-year guidance for revenue of $41.2bn to $42.1bn, comparable sales ranging from a 1.0% decline to a 1.0% increase, and adjusted diluted EPS of $6.30 to $6.60.
It also maintained expectations for an adjusted operating margin of 4.3% to 4.4% and capital expenditure of about $750m.
Chief financial officer Matt Bilunas said comparable sales had started May strongly, with month-to-date growth in the high single digits.
Best Buy said it expected second-quarter comparable sales growth of about 1.0%, ahead of analysts' expectations for a 0.4% decline cited by Reuters, as it started to lap last year's strong gaming launch in June.
The company returned $202m to shareholders through dividends during the quarter and said it still expected to spend about $300m on share repurchases during the year. Its board also declared a quarterly dividend of 96cents per share, payable on 9 July.
At 0853 EDT (1353 BST), shares in Best Buy were up 9.13% in premarket trading in New York at $70.43.
Reporting by Josh White for Sharecast.com.
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