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, signalling that the bottom of spending on gadgets may be in sight.
The company reported fourth-quarter profits that beat analysts’ expectations. Best Buy also issued guidance for annual sales and profits in line with Wall Street views.
Shares rose more than three per cent in midday 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 an 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 fuelled by oversized spending from shoppers who splurged on electronics to help them work from home or help their children with virtual learning.
Best Buy said the current economic environment makes consumer electronic sales uneven and difficult to predict. Still, Best Buy Chief Executive Officer 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 on Thursday. “It’s simply a matter of the timing.”
