Booming house sales, Apple Watch help Best Buy to big Q2 profits

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While all of its competitors struggled, Best Buy has defied expectations to post surprisingly strong 2nd Quarter sales that are partly the result of America's currently strong housing market.

Despite major competition in the electronics market – not least by online retailers such as Amazon and direct-to-customer sales from tech creators like Apple – the Minneapolis-based retailer reported Tuesday that its domestic sales rose 3.9 percent to $7.9 billion in the three months to the start of August.

Sales in stores rose by 2.7 percent and this performance, in turn, helped the recently-beleaguered company to post a 12 percent profit increase to $164 million.

Behind the improved performance, the chain says, is stronger-than-expected sales of appliances, "higher-margin" large-screen TVs and mobile phones, which offset a downturn in tablet sales.

According to the Wall Street Journal, CEO Hubert Joly credited the housing recovery with driving sales of appliances, and wearable fitness gear for fueling sales of personal technology.

The Washington Post reports that Joly said the retailer is benefiting from "broader economic tailwinds" – namely the housing market – as consumers are showing signs that they're willing to open their wallets for larger, appliance purchases.

The company's appliance category rose 21 percent in the 2nd Quarter – the 19th straight quarter in which it has grown.

Also proving a big winner was the company's tie-in with Apple. Best Buy became one of the early adopters of the Apple Watch, selling it initially in 100 stores starting this past June.

"Demand for Apple Watch has been so strong in the stores and online," Joly said, according to Fortune, adding that he expects the device to be rolled out to all 1,050 of its big-box stores by September.

The Star Tribune notes it marks a remarkable turnaround for the company, which when Joly took over in Aug. 2012 was "listing badly," with Joly himself saying some thought it would go under.

The newspaper notes that since then it has aligned its prices with competitors, beefed up its online presence and invested more in-stores – including its "store-within-a-store" partnerships with Samsung, Sony and Apple.

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