Good Deal For Best Buy

Electronics retailer Best Buy posted better-than-expected quarterly results on Tuesday, suggesting that American consumers might not be quite as shaken as some economic data suggests

Shares of Best Buy (nyse: BBY - news - people ) rose $2.19, or 4.9%, to $46.73, in midday trading, after the company announced its second-quarter profit rose 8.7%, to $250 million, or 55 cents per share, from $230 million, or 47 cents per share, a year ago. Analysts polled by Thomson Financial expected 44 cents per share.

Best Buy's earnings growth was driven by strong sales of big-ticket items. Comparable store sales grew 3.6% over the quarter as consumers picked up notebook computers and flat-panel televisions during back-to-school shopping.

The strong sales indicate the U.S. consumer is still buying expensive discretionary items, which are the first things cut from shopping lists when money gets tight. There have been mounting concerns that consumers might pull back sharply on such spending due to unfavorable economic trends.

One trend hurting consumers is declining home values. (See: "National Home Price Index Slides") Consumers also are paying more for food and gasoline (See: "Pricey Meals For Chickens Cost Sanderson"), even as they have a tough time finding mortgages and jobs. (See: "Weak Jobs Data Sinks Wall Street")

“We are navigating well in a challenging consumer environment," said Best Buy Chief Financial Officer Darren Jackson. "We’re very pleased to see operating income rate expansion for the quarter, including less deterioration in the U.S. gross profit rate.”

Best Buy said Tuesday that it expects to post yearly earnings per share in the upper half of its previously predicted $3.00-to-$3.15 range. Analysts were expecting $3.03 per share.