First-quarter sales fell as the chain grapples with cautious spending on gadgets, Best Buy reports

NEW YORK — Best Buy reported another quarterly sales decline as the nation’s largest consumer electronics chain grapples with cautious spending by Americans who are prioritizing essential purchases and paying more for things like rent.

The company has seen quarterly sales declines for more than two years, dating back to the pandemic when households bought new laptops and other equipment to work from home.

Sales were worse than Wall Street expected, but profits were better than expected. Best Buy provided muted earnings and sales forecasts for this year.

The stock rose more than 1% in pre-market trading on Thursday.

The U.S. labor market remains strong, but Americans pay more for necessities like rent. Inflation appears to have started to decline overall. Still, Americans are paying more when they use credit cards because interest rates are higher, causing many to postpone larger purchases such as appliances and other goods typically purchased on credit.

That’s the opposite of what Best Buy customers have been doing during the pandemic, when sales were driven by employees overspending on electronics to help them work from home or better prepare their children for virtual learning. Government stimulus checks also spurred much of this spending.

Best Buy plans to modernize stores to attract customers and focus on paid membership services that appeal to its customers.

Best Buy reported earnings of $246 million, or $1.13 per share, for the quarter ended May 4. That compares with earnings of $244 million, or $1.11 per share, in the year-ago period. Adjusted earnings per share were $1.20, easily topping Wall Street expectations of $1.08, according to a FactSet survey.

Sales fell to $8.85 billion from $9.46 billion and were lower than the $8.96 billion expected by industry analysts.

Comparable sales – in traditional online and in-store channels – decreased by 6.1%.

Best Buy expects earnings per share this year to be between $5.75 and $6.20 per share. Analysts forecast earnings per share at $6.04.

Best Buy expects revenue of $41.3 billion to $42.6 billion for the year. Analysts expect $41.94 billion, according to FactSet.