Behold the power of smartphones and iPads.
Those two popular consumer items almost singlehandedly saved the first quarter for Best Buy and helped it exceed Wall Street expectations Tuesday.
While net income declined 12 percent year over year to $136 million, earnings per share of 35 cents exceeded the 33 cents-per-share consensus of analysts. Revenue was up 1 percent to $10.9 billion, also slightly ahead of what was expected.
Mobile phone sales, including smartphones, jumped 28 percent in the quarter, led by sales through its standalone Best Buy Mobile stores.
As for the iPad and other tablets, "We're able to sell everything we've been given," said Executive Vice President Mike Vitelli.
"I feel good about our start to this fiscal year," CEO Brian Dunn told analysts in a morning conference call. "Sales were better than planned."
But challenges remain. Transportation costs are up. TV sales, once a Best Buy staple, are down.
Consumers are watching their purse strings. And competitors such as Amazon.com and Wal-Mart are eating away market share.
"The overall impact from negative trends in housing and employment have put pressure on everyone's wallet, and consumers remain reluctant to spend on certain big-ticket discretionary items," said Piper Jaffray analyst Jonathan Berg.
Amazon.com, in particular, remains a thorn in Best Buy's side with its Internet-only business model -- no bricks and mortar to build -- larger selection of items and sales tax avoidance.
But Best Buy is trying to counteract that by increasing its e-commerce presence and letting shoppers purchase items online and pick them up in the store. Online sales in the first quarter rose by 12 percent.
"We are a tough fighting brand," Dunn said Tuesday. "We've won every fight we've been in and will for the next 40 years."
Best Buy stock, which has declined 16 percent this year, closed at $30.13, up $1.31 for the day.
The company said sales in U.S. stores open at least 14 months were down 2.4 percent, slightly better than the 4 percent decline predicted by analysts.
International sales were up in China, where Best Buy's Five Star chain saw comparable store sales increase 9 percent. Same-store sales in Canada and Europe showed "modest" declines, the company said.
Dunn said there was "no imminent announcement" regarding expansion plans in the United Kingdom despite a British newspaper report this week that the retailer would postpone some planned new stores.
"Last year we opened six big-box stores in the United Kingdom, and we're very pleased with what we see," Dunn said.
Best Buy said that it expects its full-year revenue to be closer to the high end of its guidance of $51 billion to $52.5 billion and that it expects its first-half operating income dollars to meet expectations.
David Phelps • 612-673-7269