Electronics retailer Best Buy (BBY) heads into the holiday shopping season with some momentum as third quarter earnings beat Wall Street expectations.
Net income rose $107 million, compared to $54 million in the third quarter of 2013.
Total revenue rose 0.5% to $9.4 billion from $9.3 billion last year. The company reported better than expected earnings of 32 cents per share, compared to 18 cents in a year-ago period.
Wall Street analysts had expected revenue of $9.11 billion and adjusted earnings of 25 cents per share.
Shares rose 10% in pre-market trading to $39.16. Best Buy stock has climbed 45% to $35.54 since plummeting to $24.43 from $37.57 after announcing poor 2013 holiday sales in January.
Sales in U.S. stores grew 3.2% and online sales rose 21.6%, bolstered by the retailer selling more televisions, computers and tablets than competitors and increasing performance in sales of appliances, as well as video games and game systems.
“In the third quarter, our teams delivered positive comparable sales, improved profitability and continued progress in our transformation,” said Hubert Joly said in a statement. “As we enter the fourth quarter, we are excited about our holiday plan.”
The company’s cost-reduction plan, in its second year, yielded $65 million during the quarter with lower costs from returned products and increased efficiency throughout the retailer’s operations.
Wedbush Securities analyst Michael Pachter had expected Best Buy to surpass expectations, expecting that the retailer did well with the release of the latest iPhone models. However, the long-term view for the company, which faces tough online competition, is less hopeful, he said in a note to investors. “As gross profit dollars continue to decline and cost cuts run their course, cash flow is likely to decline,” he said.