boosted its second-quarter earnings guidance Thursday and said it should beat analysts' estimates as a result of improved gross margins and solid same-store sales.
The electronics retailer also said full-year earnings would likely exceed analysts' consensus forecast.
"The gross profit rate from continuing operations is the largest contributor to the improved outlook," said Darren Jackson, chief financial officer of the company. "The gross profit rate is expected to increase by at least 70 basis points for the current period, compared with 24.9% of revenue in the second quarter of fiscal 2003."
Best Buy now expects to earn 37 cents to 42 cents a share in the quarter ending Aug. 30. On June 18, the company projected earnings of 27 cents to 32 cents a share. Analysts are calling for 30 cents a share. In last year's second quarter, the company earned $79 million, or 24 cents a share.
"Consumers continue to migrate to higher-margin products, such as digital TVs," Jackson said. Best Buy also said cost controls helped during the quarter.
Additionally, Best Buy expects same-store sales to increase in the mid-single digits for the quarter. Second-quarter earnings will be released Sept. 17.
For the full year, the company projected earnings of $2.27 to $2.32 a share, compared with Wall Street's estimate of $2.22. The company's previous guidance was $2.17 to $2.22 a share. Best Buy earned $1.91 a share last year.
Shares of Minneapolis-based Best Buy were rising $2.32, or 5.7%, to $43 in Instinet premarket trading.