Best Buy (BBY) posted better-than-expected results after a series of disappointing quarters.
On Thursday, the company reported revenue of $9.29 billion, compared to estimates of $9.24 billion. Adjusted earnings per share jumped 10% year over year to $1.34, more than the $1.16 anticipated.
CEO Corie Barry said in the release that the company's numbers result from its focus on "sharpening" the customer experience and market positioning while "expanding our non-GAAP operating income rate in the current environment."
She added that customers are "seeking value and sales events" but are also "willing to spend on high-price-point products when they need to or when there is new compelling technology."
In a call with investors, she said they are looking at "a consumer who's very either value-oriented or innovation replacement-oriented."
Best Buy stock jumped 15% in morning trading.
This report comes after Best Buy unveiled a new tagline, Imagine That, during the quarter, updated its app, and added more experiential spaces in stores.
Same-store sales declined 2.3%, the smallest drop since Q4 2022. Appliances, entertainment products, and consumer electronics continued to struggle while computing and mobile phones rebounded.
A combination of inflation-weary consumers, a shift toward spending on experiences, a lack of innovation around technology, and a surge of purchases during COVID has weighed on Best Buy, Barry said on the earnings call.
The "housing slowdown definitely disproportionately hurts us" when it comes to appliances, with sales falling nearly 15% in the quarter, Barry added. Home Depot (HD) and Lowe's (LOW) also reported declining sales.
"What concerns us are the share losses of Best Buy in major appliances and TVs," Evercore ISI analyst Greg Melich wrote in a client note prior to results.
"We believe charging for installation of products is hurting the company’s share in products that account for approximately 30% of sales," Melich added. Its services business was up 8.5% in sales.
AI products could boost sales going forward, Barry told Yahoo Finance in a media call.
Copilot+ PCs didn't launch until about halfway through the quarter. The new PCs are capable of accessing advanced AI models, and the category launched with roughly 40 products.
Barry said 40% of the new items are exclusive to Best Buy. "It's not hugely prolific now that will change quickly," she said.
"I would argue by the back half of the year, you're going to see a much larger percent of that computing and tablets business have some kind of AI-enablement immediately that will start to make more price points available," she added.
For example, Apple will likely release an iPhone 16 next week. Both the iPhone 15 and 16 are expected to include AI technology, but the iPhone 15's lower price will make it more accessible.
"Innovation, particularly around artificial intelligence (AI) — such as with the new Microsoft Copilot laptop — is starting to gain traction, and the trend is expected to strengthen as more new technology products hit the market around the back-to-school timeframe," Joe Feldman of Telsey Advisory Group wrote in a client note.
Per a survey from Morgan Stanley analyst Alex Straton, spending on electronics increased 4% year over year among consumers who intend to shop for back-to-school. That's up from roughly flat in last year's survey. Straton called this a "potential positive read through" for Best Buy.
Barry said similar to previous years, consumers are waiting to make sure they buy what they actually need.
"We have seen a consistent pattern over the last ... five or six years where back-to-school, the bulk of it, is pushing later and later into the back-to-school season. ... There's almost this effect of 'I need to figure out how my life is going to work, and then I might go upgrade or buy new because I have a better feel for it.'"
Read more: 5 smart ways to save money on back-to-school supplies
The earnings breakdown
Here's what Best Buy reported in Q2, compared to what Wall Street expected, per Bloomberg consensus data:
Adjusted earnings per share: $1.34 versus $1.16
Net sales: $9.29 billion versus $9.24 billion
Same-store sales growth overall: -2.30% versus -3.17%
Total US same-store sales growth: -2.30% versus -3.33%
Sales growth for:
Appliances: -14.90% versus 9.93%
Entertainment: -7.4% versus -6.86%
Consumer electronics: -6.20% versus -4.67%
Computing and mobile phones: 3.90% versus 1.70%
Services: 8.50% versus 5.42%
International: -1.80% versus -2.22%
Following its Q2 earnings results, the company updated its full-year outlook. It now expects revenue to come in between $41.3 billion and $41.9 billion, compared to the previously expected range of $41.3 billion to $42.6 billion. Same-store sales are projected to decline 3% to 1.5%, compared to a previously expected decline of 3.5% to flat.
Best Buy CFO Matt Bilunas said in the release, "We expect our industry to continue to show increasing stabilization."
The company also anticipates better-than-expected profitability. It expects adjusted earnings per share to come in between $6.10 and $6.35, higher than the prior guidance of $5.75 to $6.20.
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.