Dependable Best Buy holds up against rivals large and small

The electronics giant Best Buy (NYSE: BBY) reported second-quarter net income up 61 percent, to $254 million (partly boosted by a less onerous tax rate). Gross margin rose, too, demonstrating the company’s pricing power. Revenue rose 3 percent, to $11.3 billion. Domestic revenue slipped a bit, with traffic down but average purchase value per customer rising. International sales rose 4 percent.

While Best Buy has been boosting domestic market-share lately, this quarter that dropped half a percentage point. “Constrained inventory” during the initial iPad launch was one reason the retailer lost traffic. The company still expects to increase market share for the year, though.

The near-term outlook for consumer spending remains sketchy, but Best Buy competes admirably with rivals big and small. Consumers may be skittish, but they still covet hot products like the iPad and the Kindle, which is slated for distribution through Best Buy stores. Gadget mania is a positive force for Best Buy.

Long-term investors should feel gratified to have this stock in their portfolios, regardless of fluctuations. Given its leadership in its retail niche, and its modest price-to-earnings ratio, Best Buy still looks like a good long-term buy.

(Best Buy is a “Motley Fool Inside Value” recommendation and “Motley Fool Stock Advisor” pick, and the Fool owns shares of it.)

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