Best Buy surges 13% on earnings

  @AaronSmithCNN August 20, 2013: 4:19 PM ET
best buy bby

Click chart for more on Best Buy stock

NEW YORK (CNNMoney)

Best Buy's stock rallied Tuesday after the electronics retailer reported a substantial gain in quarterly earnings, helped by aggressive cost cutting.

Best Buy (BBY, Fortune 500) said earnings jumped to $266 million in the quarter ended Aug. 3, compared with $12 million in the year-ago quarter.

The company's stock closed up 13.3% to $34.81. That helped it unseat Netflix (NFLX) as the S&P 500's top performer this year.

Chief Executive Hubert Joly said Best Buy cut $65 million in annualized costs. He said the company has managed to slash $390 million in nine months, as part of an effort to cut $725 million.

Looking ahead, Joly was a little cautious, noting that Best Buy has incurred some additional costs and an interruption in same store sales growth as it rolls out its new Samsung Experience Shops and Microsoft (MSFT, Fortune 500) Windows Stores. Same-store sales slipped 0.4% for the quarter, but Joly said they would have been flat to slightly higher if not for the Samsung roll-out.

Related: J.C. Penney posts big loss

Belus Capital Advisors chief equities strategist Brian Sozzi noted that Best Buy has made a big splash online, where same-store sales rose 10.5%.

"The sales number is even more impressive considering Best Buy's entirely new website won't launch until 2014, leading me to believe that price matching, and advertising of price matching, is closing the price perception gap with Amazon (AMZN, Fortune 500)," he said in a research note.

But Sozzi said Best Buy still has some work to do.

"Structurally Best Buy online is not where it has to be to compete effectively, and may be longer away from achieving financial awesomeness (yes, awesomeness)," he said. "For example, keywords on Google (GOOG, Fortune 500) for certain electronics bring up Best Buy on the dreaded ... second page. The team is actively working on improving its SEO." To top of page



Join the Conversation
Markets
Sponsored by
Index Last Change % Change
Dow 16,262.56 89.32 0.55%
Nasdaq 4,034.16 11.47 0.29%
S&P 500 1,842.98 12.37 0.68%
Treasuries 2.63 -0.01 -0.42%
Data as of 2:04am ET
Company Price Change % Change
Bank of America Corp... 16.39 0.39 2.44%
Facebook Inc 59.09 0.20 0.34%
Yahoo! Inc 34.21 0.76 2.29%
The Coca-Cola Co 40.18 1.45 3.74%
Intel Corp 26.77 0.21 0.79%
Data as of Apr 15
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.26%4.48%
15 yr fixed3.30%3.31%
5/1 ARM3.30%3.35%
30 yr refi4.25%4.45%
15 yr refi3.29%3.34%
View rates in your area
 
Find personalized rates:
Rate data provided
by Bankrate.com
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.