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By Nandita Bose and Yashaswini Swamynathan

(Reuters) – Best Buy Co Inc (BBY.N), the biggest U.S. electronics chain, reported an unexpected increase in quarterly sales and said it expected consumer spending to remain strong this quarter, sending its shares up nearly 15 percent.

The company, which said it benefited from demand for appliances, TVs and mobile phones, also reported higher-than-expected earnings for the second quarter ended on Aug. 1.

Chief Financial Officer Sharon McCollam said the financial markets’ recent volatility had not affected spending at Best Buy stores so far.

“As such, our outlook assumes that there will be no material changes in consumer spending in the third quarter,” she said.

Best Buy forecast flat to low single-digit percentage revenue growth and approximately flat operating income, with increased expenses due to inflation and investments offsetting higher gross profit.

In the international business, the company said it expected a revenue decline of about 30 percent because of foreign currency fluctuations and its brand consolidation efforts in Canada.

Chief Executive Officer Hubert Joly said Best Buy had eliminated $100 million in annualized expenses as part of a recent cost-cutting initiative announced in March. Its goal is to save $400 million over three years.

Best Buy, which began selling the Apple Watch online and in a few stores earlier this month, said the product would be in 900 of its stores by Sept. 4 and in all big-box stores and 30 mobile stores by the end of September.

The company will also become an Apple Inc (AAPL.O) authorized reseller and will pilot the program in 50 stores.

Best Buy’s revenue rose 0.8 percent to $8.53 billion in the second quarter from a year earlier. Analysts on average had expected $8.29 billion, or a decline of 2 percent, according to Thomson Reuters I/B/E/S.

U.S. sales rose for the fourth straight quarter, accounting for nearly 93 percent of the total.

Sales at stores open at least a year rose 2.7 percent in the United States.

Net income attributable to shareholders rose to $164 million, or 46 cents per share, from $146 million, or 42 cents per share.

Excluding special items, Best Buy earned 49 cents per share, beating the analysts’ average estimate of 34 cents.

The company’s shares, which had fallen 24 percent in the past six months, were up 14.9 percent at $33.62 in morning trading.

(Reporting by Nandita Bose in Chicago and Yashaswini Swamynathan in Bengaluru; Editing by Saumyadeb Chakrabarty and Lisa Von Ahn)

A Best Buy store is pictured in Westminster, Colorado January 16, 2014. REUTERS/Rick Wilking

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