• by Sarah Mahoney  @mahoney_sarah, June 18, 2008

Consumers may be cutting back on discretionary spending, but they're keeping Best Buy busy.

The Minneapolis-based retailer says its same-store sales gained 3.7% in the first quarter of the year, and that revenue rose to $8.99 billion, from $7.92 billion in the same quarter last year. And the company estimates that its market share in the quarter reached a new record--gaining about 1.5 percentage points, led by strong sales in TVs, computing, video gaming and mobile phones.

Earnings, however, declined to $179 million from $192 million, due to sales declines in higher-profit product categories. Sales fell, for example, in consumer electronics, with digital cameras, CDs, and projection and tube TVs among the losers. And appliance sales dropped more than 11%. Flat-panel TVs, video gaming, notebook computers and mobile phones all gained.

Online sales were especially strong--with revenues gaining 30% for the quarter, which the company says is due to new features, including improved navigation and customer reviews and ratings.

Best Buy already operates about 600 Best Buy Mobile locations within its U.S. stores and says those locations continue to post "strong, double-digit comparable store sales gain for the wireless category." All U.S. locations are expected to have Best Buy Mobile by the end of the year, and the company says it is extending its relationship with the Carphone Warehouse Group PLC to create similar units in Canada, China, Mexico and Turkey. It's also starting a new venture with CPW, for expansion in Europe.

The company also stuck by its earnings estimates. "We are off to a solid start," it says in its release. "The ability of our employees to deliver strong top-line and positive operating income results in a challenging environment reflects their focus on the customer and underscores our belief in their ability to grow the company."

Circuit City, its struggling rival, is expected to post a loss when it reports its results later this week.