Nintendo Switch boosts Best Buy
Console’s popularity, company’s strategy of cutting costs pay off with biggest share rally in nine months
NEW YORK— Best Buy Co. got a boost from Mario and Luigi in the first quarter, as demand for Nintendo Co.’s new Switch game console helped the retailer post a surprise sales gain.
Comparable-store sales — a closely watched benchmark — rose 1.6 per cent, the company said on Thursday. Analysts had predicted a decline.
Best Buy’s earnings also topped analysts’ projections, sending the shares to a record high with their biggest rally in nine months.
The Switch, which debuted March 3, has emerged as a bright spot in a lacklustre retail industry. In April, the electronics category overall posted its first monthly gain in almost two years, according to government data cited by RBC Capital Markets.
Best Buy also saw gains in laptops — once a declining category — thanks to premium offerings above $500.
“This is a performance that shows the strength in our customer value proposition,” Best Buy CEO Hubert Joly said in a call with reporters Thursday.
Shares of Best Buy surged as much as 19 per cent to $59.92 (U.S.) in New York trading, the biggest intraday increase since August.
They had gained 18 per cent this year through Wednesday’s close.
The results backed up the compa- ny’s claims that 2017 would be the year it shifts into growth mode after a long stretch of cutting costs, selling off foreign divisions and improving operations.
Best Buy looks like it will be the last big-box electronics chain standing, said David Schick, director of research and lead retail analyst for Consumer Edge Research.
“Best Buy remains a post-apocalyptic retailer in our view,” he said.