NEW YORK (AP) — Shares of Best Buy Co. jumped on Friday after the electronics chain showed signs of starting to reverse declining sales during the critical holiday selling season, a better-than-expected result.
Shares rose 12 percent during midday trading.
Best Buy has been facing tough competition from discounters and online retailers, as people browse electronics in stores and then go home to buy them more cheaply online, a practice known as "showrooming." To combat this, it has instituted a cost-cutting program, invested in more employee training and put an online price matching policy in place during the key holiday period of November and December. The holiday quarter accounted for about a third of Best Buy's revenue last year.
The chain said that revenue at stores open at least a year fell 1.4 percent for the nine weeks ended Jan. 5. This figure is a key gauge of a retailer's health because it excludes results from stores recently opened or closed.
The company's U.S. performance was flat. While this was slightly below the 0.3 percent increase Best Buy reported a year ago, President and CEO Hubert Joly said in a statement that it was an better than the past several quarters.
Best Buy tapped Joly in August to help reverse its slide. Joly has made management changes, including hiring CFO Sharon McCollam in November, and embarked on a turnaround plan.
Morningstar analyst R.J. Hottovy said the results show that some of Best Buy's initiatives, such as increased employee training and online price matching, helped boost sales.
But he added that the company still faces bigger problems such as tough competition from sellers like Amazon.com and more and more vendors selling products to customers directly.
"Sales are incrementally positive, but Best Buy still faces an uphill battle with regard to its turnaround," he said.
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