Best Buy posts profit despite continued sales declines

Electronics retailer Best Buy (BBY) is showing signs that it can compete in a market that is increasingly going online.

The embattled retailer announced second-quarter earnings Tuesday that met, and in some ways, surpassed Wall Street expectations. Best Buy's net income was $146 million, down 41% from $248 million last year.

But the company reported earnings of 44 cents per share, compared to 32 cents in a year-ago period.

Total revenue fell 3.2% to $8.9 billion from $9.2 billion last year. Wall Street analysts had expected revenue of $8.99 billion and adjusted earnings of 31 cents.

Sales in stores fell 2.7%, which was worse than the 2.2% analysts had expected. Sales fell 0.6% in the first quarter of the year.

Best Buy is feeling the same pressures as other brick-and-mortar stores. In-store traffic fell, but the customers who came into stores were more likely to buy, CEO Hubert Joly said in a statement. And the company's overall sales decline of 2% is better than overall industry sales declines of 2.5%.

"Like other retailers and as reflected in this quarter's performance, we continued to see a shift in consumer behavior: consumers are increasingly researching and buying online," Joly said.

The company drive to improve online sales with the ability to ship products directly from each of its stores drove a 22% increase in U.S. online sales, Joly said. And Best Buy will be adding special Samsung and Sony home theater areas to more than 800 stores, he said.

These measures could help the company hold the line against what are expected to be tough forces throughout the rest of the year. Best Buy executive vice president and chief financial officer Sharon McCollam said that low-single digit sales declines are expected in the third and fourth quarters.

"industry-wide sales are continuing to decline in many of the consumer electronics categories in which we compete," she said. "We are also seeing ongoing softness in the mobile phone category ahead of highly-anticipated new product launches."

Belus Capital Advisors CEO Brian Sozzi had expected "surprisingly decent" earnings from Best Buy on TheStreet.com noting that it "has some interesting business drivers that Wall Street may be overlooking" including increased appliance sales, improved online sales and consumer purchases of big-screen TVs.