May 30 (Reuters) - Best Buy beat Wall Street estimates for quarterly profit on Thursday as benefits from its membership program and cost-saving efforts helped overcome a steeper-than-expected drop in comparable sales.
While consumers in the United States are still shy on big-ticket discretionary spending, Best Buy is hoping to see sales normalize this year as shopping for electronics gets a boost from consumers looking to upgrade or replace their gadgets after more than two years of restraint on spending on electronics.
The company has also benefited from people signing up for its two-tiered membership program, which it refreshed last year, helping the top electronics retailer in the United States retain shoppers and drive better margins.
Best Buy also maintained its annual comparable sales forecast of flat to a decline of up to 3%, and CFO Matt Bilunas said the company believes it was trending towards the midpoint of that range on sequential improvement in sales.
"The company is managing profitability well with benefits from its paid membership program, services sales growth and expense cuts," said Wedbush analyst Seth Basham, adding that Best Buy maintaining its annual forecasts was a positive.
Best Buy said in February that it ended fiscal year 2024 with 1.2 million new members and that increased profitability through the program added about 45 basis points of total year-on-year operating income expansion in fiscal 2024.
Best Buy reported a drop in comparable sales for a tenth straight quarter and said its sales were "slightly softer" than its expectations in the reported period.
Shares of the company, which have fallen about 8% so far this year, were up about 11% in morning trading.
Best Buy reported a 6.1% fall in quarterly comparable sales, while analysts expected a fall of 4.94%, according to LSEG data.
First-quarter adjusted earnings per share of $1.20 beat expectations of $1.08.
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