NEW YORK (AP) — Cost cuts helped consumer electronics retailer Best Buy record a stronger-than-expected profit in the first quarter, but sales continued to be weak as shoppers hold off for new product launches of smartphones and tablets expected in the fall.
Adjusted earnings beat expectations and shares rose more than 5 percent in morning trading.
But sales fell short of Wall Street estimates. And Best Buy said it expects revenue in stores open at least 14 months, a key retail metric known as same-store sales, will fall in both the second and third quarters.
Best Buy is grappling with a weak consumer electronics industry and increased competition from online stores, notably Amazon.com, and discounters like Wal-Mart. Under CEO Hubert Joly, the company has been trying to turn around results, revamping merchandise, training employees and cutting costs.
ISI analyst Greg Melich said Best Buy's cost cutting efforts are helping offset weaker sales and costs related to price matching with competitors.
"Progress continues on the cost reduction front, but gross margin dollar declines continue as secular industry pressures persist," he wrote in a note to investors.
Revenue at stores open at least 14 months fell 1.9 percent during the three months ended May 4. That is not expected to improve in the next two quarters, said CFO Sharon McCollam in a call with analysts.