What's going on?

Best Buy � the largest electronics retailer in the US � reported a surprisingly large increase in profits. Its stock went up 12.5%! Its profit increase was mainly driven by an almost 4% rise in US sales.

What does this mean?

It is a sign that the American consumer is doing well and choosing to spend money, especially on big ticket items like TVs. Some of this demand is probably being driven by the strong housing market and consumers subsequently buying new appliances for their homes.   Looking forward, Best Buy�s CEO said that the increased financial market volatility had yet to affect consumer spending at its stores.

Why should I care?

1. While the news is good for Best Buy, the second quarter is traditionally a quiet one in retail compared to fourth quarter, which includes the holiday season. If Best Buy can replicate this success in the fourth quarter, its stock should perform even better.
2. However, the consumer is generally moving online. Best Buy does have an e-commerce platform, but it�s unclear how competitive it will be with the likes of Amazon over the long term. Investors were expecting a decline in sales; while they were pleasantly surprised this time, it might only be a matter of time before sales do start declining.