Robust Sales of HDTVs Lift Profit at Best Buy

Strong sales of high-definition TVs at Best Buy Co. helped fuel second-quarter profit, which rose 22% and beat Wall Street expectations.

The nation’s largest consumer electronics retailer also said it would add more television installers and boost advertising spending to keep the momentum going, even though the picture for consumer spending is murky.

Its shares rose $4.37, or 9.1%, to close at $52.14.

The strong results were tempered by uncertainty about the future of the economy, as all retailers are watching to see whether higher interest rates and a cooling housing market prompt consumers to hold back. Best Buy said the housing market had already affected appliance sales, which dropped 2.6% at stores open more than 14 months.

On the other hand, gas prices are falling and fears of a major slowdown could prove overblown. Citing the conflicting signals, Chief Financial Officer Darren Jackson said the conservative thing was to leave expectations unchanged, at $2.65 to $2.80 a share for the full year. Analysts are expecting $2.80 a share on revenue of $35 billion.

Jackson said 60% of the company’s revenue comes in the second half of the year, which includes the holiday season.

Richfield, Minn.-based Best Buy said it earned $230 million, or 47 cents a share, for the three months ended Aug. 26, compared with $188 million, or 37 cents, a year earlier. Revenue rose to $7.6 billion from $6.7 billion a year earlier.

Analysts polled by Thomson Financial were expecting 44 cents a share on revenue of $7.5 billion.

One key measure was a little weaker than most analysts were looking for: Sales at stores open at least 14 months rose 3.7% from the same period a year earlier, with a 9.3% gain at Canadian stores offsetting a 3% gain at U.S. stores. Many analysts expected such comparable-store sales to rise 4% or more.