(Updates stock price in fifth paragraph.)
June 14 (Bloomberg) -- Best Buy Co., the world’s largest consumer electronics retailer, reported first-quarter profit that exceeded analysts’ forecasts, helped by rising demand for smartphones.
Net income fell 12 percent to $136 million, or 35 cents a share, in the quarter ended May 28, the Richfield, Minnesota- based company said today in a statement. Analysts predicted 33 cents, the average estimate in a Bloomberg survey. The shares climbed the most in nine months.
Increasing demand for mobile phones and tablets countered declining revenue from televisions. As competition intensified from Amazon.com Inc. and Wal-Mart Stores Inc., Chief Executive Officer Brian Dunn began reorganizing stores and retraining employees last year to push sales of gadgets that work together.
“There’s substantial strength there,” David Schick, an analyst at Stifel Nicholas & Co. in Baltimore, said today in a telephone interview. He recommends buying the shares. “All of last year the business got worse than it had in the prior quarter, and it’s showing reversal of that.”
Best Buy rose $1.31, or 4.6 percent, to $30.13 at 4 p.m. in New York Stock Exchange composite trading, the biggest percentage gain since Sept. 14, 2010. The shares have declined 12 percent this year.
Sales by stores open at least 14 months fell 1.7 percent, including a drop of 2.4 percent in the U.S. Analysts projected a domestic decline of 4 percent, the median of five estimates by International Strategy & Investment Group, Janney Capital Markets, Caris & Co., Deutsche Bank Securities Inc. and RBC Capital Markets.
Revenue increased 1.4 percent to $10.9 billion. Analysts estimated $10.7 billion.
As part of the stores’ reorganization, floor walkers were retrained to show shoppers how gadgets work together -- a concept Dunn calls the “connected store.”
The connected store represented a midcourse correction for Dunn, whose previous strategy involved loading up stores with exclusive products, including an electric bike. Best Buy has since lost customers to Apple Inc., Amazon.com, Wal-Mart Stores and Costco Wholesale Corp., according to analysts.
U.S. connection revenue, which comes from mobile phone contracts and wireless broadband for phones, rose 20 percent in the first quarter.
Best Buy reiterated its full-year projection for earnings per share of $3.30 to $3.55, excluding restructuring costs. Analysts predicted $3.47. The retailer earned $3.43 last year.
Net income was $155 million, or 36 cents a share, in the year-earlier quarter.
(Best Buy held a conference call for analysts at 10 a.m. New York time. To listen, click BBY US <Equity> EVT <GO>).
--Editor: Cecile Daurat
To contact the reporter on this story: Chris Burritt in Greensboro at firstname.lastname@example.org
To contact the editor responsible for this story: Robin Ajello at email@example.com