Best Buy 1st quarter net income fallsby Martin Moylan, Minnesota Public Radio
Minneapolis — Shares of Best Buy rose today even though the company's first quarter net income dropped 12 percent to $136 million.
Weak sales of TVs helped push down Best Buy's net income for the three months ending May 28. Sales at stores open at least 14 months — a key benchmark known as comparable store sales — fell by about 2 percent. But the retailer's stock is up about 5 percent Tuesday because Wall Street expected a bigger profit drop.
Expectations are everything, especially for a stock this inexpensive. First and foremost sales were better, which is critical here," said Dave Heupel, an analyst with Thrivent Financial.
Heupel said Best Buy saw a real nice uptick in the mobile business, which is an area of growth for them. He said the company's Internet business is strong too.
"They had a tough run and [the] bottom line is I think there were some glimmers of hope here, enough to get some people excited that things may be bottoming fundamentally," he said.
Best Buy's stock price had fallen by nearly a third in the past year. The company has seen its sales slip as it faces increasing competition from rivals such as Wal-Mart, Target, and Amazon.com. Seen as a bellwether in consumer electronics, Best Buy cheered investors by affirming its sales and profit forecasts for its current fiscal year.