Best Buy beat Wall Street's quarterly profit estimates, as mobile phones sales offset weak demand for TVs and entertainment software during the critical holiday season.
For the fourth quarter that ended February 26, net income fell 16 percent to $651 million. But Wall Street was expecting a steeper decline.
"The market was a bit worried about what Best Buy would deliver for their fourth quarter, and it actually came in a bit better," said Matt Arnold, an analyst with Edward Jones.
In the U.S., sales at Best Buy stores open at least 14 months fell 5.5 percent. The retailer hopes to reverse the sales decline, largely through an increased focus on mobile phones, home appliances and electronic gaming.
INCREASING ONLINE-ONLY INVENTORY
Best Buy says it has been increasing its inventory of TVs and other products that it only sells online, a move the retailer expects will help it better compete with rivals on price.
Best Buy has been losing bargain-hungry shoppers to online retailers, as well as mass merchants such as Target and Wal-Mart. But Best Buy Executive Vice President Michael Vitelli said his company has been expanding its online selection of consumer electronics to match competitors' selections and prices.
"We have a similar operating model there and can compete effectively in that channel," he said.
Historically, a Best Buy store has stocked about 100 different TVs. Online, Vitelli says Best Buy will now have over 400 TVs, including 300 not available in Best Buy stores.