Best Buy sees shares rocket 21%

MINNEAPOLIS — Best Buy’s shares surged more than 21 percent Thursday, signifying just how impressed investors were that the retailer was able to find sales growth amid an otherwise gloomy retail landscape.

Higher sales in gaming amid the launch of the Nintendo Switch and sales that improved once delayed federal tax refund checks arrived helped push the company’s sales above its own and analysts’ expectations in the first quarter. The company also cited strong sales in computing and the connected home segment.

The electronics retailer, based outside Minneapolis, expecting the momentum to continue into the current quarter, raised its guidance for the year.

There has been a building sense that traditional retailers can’t compete with online-only retailers, said David Schick, lead retail analyst with Consumer Edge Research.

“So these results are changing lots of minds this morning as to the efficacy and durability of their turnaround,” he wrote in an email.

Overall sales at Best Buy in the quarter rose 1 percent to $8.5 billion, up from $8.4 billion a year ago. Comparable sales in the U.S. rose 1.4 percent, which was much better than the 1.5 percent to 2.5 percent drop the company had forecast. Online sales rose 23 percent.

The Nintendo Switch, which retailers have had trouble keeping in stock since it launched in March, also helped Minneapolisbased Target Corp. reverse a decline in its electronics sales in recent months. The retailer logged its best quarter in the category in three years.

In the February-to-April quarter, Best Buy’s net earnings were $188 million, down from $229 million in the same quarter a year ago, when it benefited from some settlement proceeds. When adjusted for one-time expenses, it earned 60 cents a share, which was better than the 40 cents analysts were expecting and the 43 cents it reported a year ago.

The shares rose $10.83, or 21.5 percent, to close Thursday at $61.25.