Best Buy, the No.1 U.S. consumer electronics retailer, posted a forecast-beating jump in quarterly comparable sales and earnings on Thursday, but online sales growth decelerated and shares dipped in pre-market trading.
Best Buy’s sales at established stores rose 7.1 percent in the first quarter ended May 5, handily beating analysts’ average expectation for a 2.9-percent increase, according to Consensus Metrix.
Domestic online comparable sales growth slowed to 12 percent growth in the U.S. from a year ago, compared to 22.5 percent growth.
Overall sales growth was aided by strong consumer demand and better product innovation. Best Buy did not immediately provide details on factors driving the slowdown in online sales.
Best Buy’s shares, which opened up in premarket trade, reversed course and fell over 2 percent. The shares have risen almost 11 percent since the start of the year.
Despite the slowdown in e-commerce sales during this quarter, the company’s turnaround has been strong. The Richfield, Minnesota-based retailer has weathered the encroachment of Amazon.com Inc better than most retailers. It posted its best holiday quarter performance last year since 2003.
In March, Best Buy’s Chief Executive Hubert Joly told Reuters in an interview the company has completed a five-year turnaround and is ready to compete with Amazon to prove U.S. retail is not a “winner takes all” situation.
Best Buy has about 15 percent of the U.S. consumer electronics market. Along with Amazon, the two retailers have about 25 percent market share, leaving room to grow, Joly said.
The company’s investments in price-matching, faster delivery, improving the search function on its website and better customer service to draw shoppers to its stores and website have weighed on profitability.
Non-GAAP operating income as a percentage of revenue was down slightly from a year ago; so was the domestic gross profit rate, driven primarily by rate pressure in the mobile phones category and a legal settlement.
Best Buy’s net income rose to $208 million, or 72 cents per share, in the quarter, from $188 million, or 60 cents per share, a year earlier.
Excluding items, earnings were 82 cents per share. Analysts had expected earnings per share of 74 cents, according to Thomson Reuters I/B/E/S.
The company’s revenue rose to $9.10 billion, beating estimates of $8.74 billion.