FILE - People are silhouetted against the sky at dawn as they attend a sale at a Best Buy store Friday, Nov. 25, 2022, in Overland Park, Kan. Best Buy reported lower fourth-quarter sales and net income, Thursday, Feb. 29, 2024, as shoppers remain cautious about spending on gadgets. (AP Photo/Charlie Riedel, File)
NEW YORK (AP) – Best Buy’s shares rose on Thursday as the nation’s largest consumer electronics chain posted a smaller-than-expected sales decline for the fiscal fourth quarter, signaling that the bottom of spending on gadgets may be in sight.
The Minneapolis-based company reported fourth-quarter profits that were below analysts’ expectations. Best Buy also issued guidance for annual sales and profits that were in line with Wall Street views.
Shares rose nearly 5% in morning trading.
The job market has remained resilient, but Americans are facing higher prices on many necessities like rent and certain foods, even as the inflation rate is easing overall. And it’s still costing more to take out loans for appliances, cars and houses, or to use a credit card. A still tough housing market has made shoppers pull back on big ticket items like TVs. Moreover, shoppers continue to spend on experiences like concerts and travel. As a result, consumers have become cautious about spending on gadgets and other items.
In fact, during the holiday season, shoppers were deal-driven in a environment that was even more promotional than before the pandemic, Best Buy said.
That scenario marks a big difference from Best Buy’s sales during the depths of the pandemic, which were fueled by oversized spending from shoppers who splurged on electronics to help them work from home or help their children with virtual learning. Government stimulus checks fueled a lot of that spending as well.
Best Buy said the current economic environment makes consumer electronic sales uneven and difficult to predict. Still, Best Buy CEO Corie Barry remains optimistic.
“We remain confident that our industry will grow again after two years of declines,” Barry told analysts during the earnings call Thursday. “It’s simply a matter of the timing.”
To get shoppers to spend more, Best Buy plans to freshen up its stores and focus on its paid membership services, which is resonating with its customers, and on further personalizing the shopping experience, like the smartphone app’s homepage
Best Buy reported net income of $460 million, or $2.12 per share, in the quarter ended Feb. 3. That compares with a profit of $495 million, or $2.23 per share, in the year-ago period. Adjusted per share results were $2.12, below the $2.52 per share that analysts were expecting, according to FactSet.
Sales were $14.65 billion for the quarter, down from the $14.73 billion a year ago. Analysts were expecting $14.56 billion.
Comparable sales – business from its stores and its online channels – fell 4.8% in the quarter, an improvement from the 6.9% drop in the previous quarter and better than what analysts had anticipated.
Best Buy said it expects that sales for the current fiscal year to be in the range of $41.3 billion to $42.6 billion. Analysts are expecting $42.3 billion, according to FactSet.
The company projects comparable sales will range from a decline of 3% to unchanged in the current year.
Best Buy anticipates earnings per share for the year to range from $5.75 per share to $6.20 per share. Analysts were expecting $6.16 per share.
Shares rose $3.70 to $83.38 in morning trading Thursday.
