(Reuters) — Best Buy Co Inc reported a much higher-than-expected quarterly profit on strength in health and wearable items like smartwatches, and the largest U.S. electronics retailer raised its earnings outlook, sending its shares up more than 16 percent.
The company said it now expected low-single-digit percentage growth in fiscal-year operating income, compared with a previous forecast of “approximately flat” results.
“We continue to expect the slight revenue decline in the first half to be offset by slight growth in the back half,” Chief Financial Officer Corie Barry said in a statement.
Excluding special items, the company earned 57 cents per share in the second quarter ended on July 30. Analysts on average had expected 43 cents, according to Thomson Reuters I/B/E/S.
Sales at established stores rose 0.8 percent. Analysts had expected a 0.60 percent fall, according to research firm Consensus Metrix.
Best Buy said sales rose for home theater systems, major appliances and computing products, as well as smartwatches, but declined for mobile phones and gaming.
Best Buy also forecast revenue of $8.8 billion to $8.9 billion for the third quarter, while analysts on average were expecting $8.77 billion.
The company expects earnings of 43 cents to 47 cents per share, compared with Wall Street forecasts of 45 cents.
Revenue rose slightly to $8.53 billion in the second quarter, snapping a three-quarter streak of declines. Analysts on average had expected $8.40 billion.
Best Buy said net income rose to $198 million, or 61 cents per share, from $164 million, or 46 cents per share, a year earlier.
(Reporting by Nandita Bose in Chicago and Subrat Patnaik in Bengaluru; Editing by Lisa Von Ahn)