Best Buy Stays Strong

Updated from 8:27 a.m. EDT

Best Buy (BBY Quote - Cramer on BBY - Stock Picks) cut costs and increased sales in its first quarter, blowing away Wall Street's profit expectation, but the consumer electronics giant kept its earnings target in place for the year in a display of caution about the economy.

The company boosted its first-quarter earnings by 38% to $234 million, or 47 cents a share, compared with the $170 million, or 34 cents a share, it logged in the same quarter last year. Analysts were expecting earnings of 36 cents a share, according to Thomson First Call.

Shares of the retail chain recently were up $1.66, or 3.4%, to $50.69.

Best Buy held fast to its previous earnings guidance for the fiscal year, estimating results in a range from $2.65 to $2.80 a share. Analysts, on average, forecast results in the midpoint of that range at $2.72.

"Realistically, we think it's too early in the year to change our view on earnings," said Best Buy CEO Brad Anderson on a conference call with analysts.

Anderson said Best Buy is operating in an "economically mixed environment" with rising interest rates, high gas prices and a softening housing market posing headwinds to consumer spending. But ongoing demand for flat-screen televisions and other big-ticket items is providing a tailwind for the leading electronics chain.

In its first quarter, Best Buy's sales rose to $6.96 billion from $6.12 billion a year ago. Analysts projected sales of $6.84 billion. Same-store sales, or sales at stores open at least a year, rose 4.9%, with domestic same-store sales up 4.6% and international comps up 7.1%.

"The comparable-store sales gain was driven by an increase in the average transaction size, as the company's revenue mix continues to reflect a shift toward higher-ticket items," Best Buy said.