Best Buy’s Good Quarter Boosts Wall Street’s Confidence in the Consumer
Before the open today Best Buy (NYSE: BBY), the nation’s largest electronics retailer, announced a pretty good fiscal (ended Aug 26, 2006) second quarter.
Same store sales in the United States were up 3.0% in the three months ended Aug 26, 2006 compared to the comparable 3 month period last year. Domestic revenue was $6.621 billion compared with $5.997 billion last year – a 10.4% increase.
Best Buy’s shares gained $4.37, 9.15%, on the day to finish at $52.14 on heavy volume – 27.95 million of 482 million shares outstanding, 5.8% of the company, traded hands. Competitor Circuit City rose on the news as well.
Casual Dining chains such as Brinker International (NYSE: EAT), the owner of Chili’s, and OSI Group (NYSE: OSI), owner of Outback Steakhouse, rallied on the news as well. In fact, the whole retail sector seemed to take comfort as the S&P Retail Index rose 3.12%.
In other words: The Street interpreted Best Buy’s results as saying that the American consumer is not dead and will continue to spend on discretionary items.
We shall see.