Best Buy reports lower 4Q sales and profits as shoppers remain cautious

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 reported on Thursday a drop in fourth-quarter sales and profits as shoppers remain cautious about spending on consumer electronics.

Results at the nation's largest consumer electronics chain's were below Wall Street views, but sales beat analysts' expectations. Best Buy also issued guidance for annual sales and profits that were in line with Wall Street views.

Shares rose more than 3% in premarket 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. As a result, consumers have become cautious about spending.

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 gadgets 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, based in Minneapolis, has said the current economic environment makes consumer electronic sales uneven and difficult to predict. Still, the latest quarter showed an improvement in spending on gadgets.

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.

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.