Best Buy Co. Inc. (NYSE: BBY) reported fiscal third-quarter results before markets opened Thursday. The big-box retailer of electronics gear reported adjusted diluted earnings per share (EPS) of $0.32 and $9.38 billion in revenues. In the same period a year ago, Best Buy reported EPS of $0.18 on revenue of $9.33 billion. Third-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.25 and $9.11 billion in revenue.

Consolidated comparable store sales rose 2.2% in the quarter, compared with a rise of 0.3% in the third quarter a year ago. In the United States, comparable sales in the brick-and-mortar stores rose 3.2% and online sales rose 21.6%. Internationally, comparable sales fell 3%, but that is less than half the decline in the third quarter of 2013.

U.S. revenue rose 2.3% year-over-year in the third quarter, driven by the rise in same-store sales. Domestic online sales rose about 3.4% sequentially to $601 million. Excluding a revenue benefit of 0.8% due to an accounting decision, same-store sales growth totaled 2.4%.

Gross profit margins in the United States fell from 23.5% to 23.0%, which Best Buy attributed to a lower gross profit rate in the mobile business, “structural investments” in price competitiveness, more revenue from lower-margin gaming products, a very competitive promotional environment in tablets and a 10-basis point negative impact from its new credit card agreement.

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Looking ahead, Best Buy expects fourth-quarter same-store sales and revenue to be flat year-over-year. The CFO also said that the gross profit rate will rise and SG&A spending will be flat. The net result is an improvement in adjusted EPS of 0.5% year-over-year, which would total about $1.30 per share, slightly below the current consensus estimate of $1.31.

International same-store sales declined 8.4%, driven by a 3% drop in sales driven by China, a negative impact from currency exchange rates, and the loss of revenue from store closings in Canada and China.

The company’s CEO said:

As we enter the fourth quarter, we are excited about our holiday plan … Like every holiday, though, we believe the outcome of [our] initiatives is, and will continue to be, tempered by other external and internal factors – including the investments that are required to drive them.

We expect this report to light a fire under Best Buy’s shares. Since late May, Best Buy has raised its dividend and shares have gained about 44%. The company still faces some tough headwinds with low margin products and hyper-competitive pricing, but the turnaround seems to be pointed in the right direction again.

Shares were up about 7.5% in premarket trading Thursday, at $38.20 in a 52-week range of $22.15 to $43.19. Thomson Reuters had a consensus analyst price target of around $37.00 before the results were announced.

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