NEW YORK (AP) — Best Buy, the nation’s largest consumer electronics chain, reported another quarterly drop in sales as Americans pull back on purchases of appliances and other consumer electronics gadgets to focus on essentials.
The company’s results, announced Thursday, beat Wall Street estimates, however. The Richfield, Minnesota-based retailer downgraded its sales outlook but raised its earnings view for the current fiscal year. Shares rose more than 7% in pre-market trading Thursday.
Best Buy reported earnings of $291 million, or $1.34 per share for the three-month period ended Aug. 3. That compares with $274 million, or $1.25 per share, in the year-go period.
Sales slipped 3% to $9.29 billion from $9.58 billion in the quarter.
Analysts were expecting $1.16 per share on sales of $9.23 billion, according to FactSet.
Comparable sales — those sales from online channels and physical stores — fell 2.3%. That was a smaller decline from the 6.1% reported in the previous quarter.
Consumers have been wrestling with high prices and elevated interest rates. The government reported earlier this month that hiring was much weaker than expected in July and the unemployment rate rose for a fourth straight month. Yet since then, economic reports have shown that layoffs are still low and that activity and hiring in services industries remains solid.
Shoppers also focusing more on experiences like travel and tickets to concerts, which also have eaten into shoppers’ spending on gadgets.
For Best Buy, the latest trends are a reversal of what happened during the height of the pandemic, when its sales were fueled by outsized spending from workers splurging on electronics to help them work from home, or to get their children better equipped for virtual learning. Government stimulus checks also fueled spending as well.
To perk up sales, Best Buy is modernizing its stores to entice shoppers and focus on its paid membership services that have resonated with its customers. The company has been also reducing its layers of management and reinvesting in more labor at its stores to help shoppers.
Best Buy is also banking on new gadgets like AI-imbued personal computers from the likes of Microsoft. While expensive, they are more efficient and offer more battery life that shoppers will value. And these new devices will result in lower prices for the older computers.
Best Buy downgraded its sales outlook for the fiscal year from the previous quarter. It now expects revenue to range from $41.3 billion to $41.9 billion, which compares to prior guidance of $41.3 billion to $42.6 billion. It projects comparable sales to decline from 1.5% to 3%. In May, it expected the range to be anywhere from unchanged to down 3%.
The company upgraded its earnings outlook for the year to a range of $6.10 to $6.35 per share. That compares with prior guidance of $5.75 per share to $6.20 per share.
Analysts were expecting $6.07 per share on sales of $41.75 billion, according to FactSet for the year.
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