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Best Buy Smashes Earnings Expectations, Jumps 13 Percent

Best Buy Co. Inc. (BBY) , one of the best-performing stocks on the market this year, continued their impressive turnaround with a quarterly earnings report that far exceeded expectations. The
Jacob Harper received his BA from the University of Missouri in 2005, and his MA in Writing from Missouri State in 2009. He's written for American Express, Wisebread, LA Foodie, and Fox Digital, and he served as a Writer & Editor for the 2013 Los Angeles edition of the guidebook series Not For Tourists. Jacob currently lives in Los Angeles.
Jacob Harper received his BA from the University of Missouri in 2005, and his MA in Writing from Missouri State in 2009. He's written for American Express, Wisebread, LA Foodie, and Fox Digital, and he served as a Writer & Editor for the 2013 Los Angeles edition of the guidebook series Not For Tourists. Jacob currently lives in Los Angeles.

Best Buy Co. Inc. (BBY) , one of the best-performing stocks on the market this year, continued their impressive turnaround with a quarterly earnings report that far exceeded expectations.

The electronics big-box retailer had been hurt significantly in 2012 by the ongoing shift to digital media and the growth of e-commerce retailers like Amazon.com Inc. (AMZN) . Best Buy approached the problem by cutting costs across the board, and significantly shrinking the amount of floor space devoted to CDs and DVDs, which used to account for almost 20 percent of the sales floor, to higher-priced, more popular items like smartphone and tablets.

Coupled with the shift away from physical media, the company also renewed focus on better training employees. While Best Buy has a hard time adequately competing with Amazon’s selection, they can seriously challenge them in quality of customer service.

Best Buy also rolled out a price-matching strategy that also undercuts Amazon. While the strategy certainly affected Best Buy’s bottom line, the 30-point basis decline was not as severe as Wall Street analysts had expected.

Concerning their direct competition with Amazon over the electronic retail market, Best Buy posted significant gains in their online business.  Sales in that division increased over 10 percent to hit $477 million in the quarter, or 5.12 percent of total revenue.

This point sparked analysts' optimism over the retailer’s chances against Amazon. Belus Capital Advisor Brian Sozzi wrote, "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."

For their second quarter 2013 earnings report, Best Buy reported a net profit of $266 million after write-downs, or $0.32 per share, versus the net profit of $12 million, or $0.04 per share, from the same period a year ago. Revenue for the quarter was $9.3 billion, as compared to $9.34 billion from the previous year. Analysts were expecting a profit of $0.12 per share on revenues of $9.13 billion.

Best Buy is up 13.18 percent to hit $34.78 a share. They're up a whopping 160.20 percent on the year.

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