(Bloomberg) -- Best Buy Co. shares rose as the retailer struck a more upbeat tone about reversing a two-year slump amid soft demand for electronics and appliances. 

Comparable sales — a key metric for the retail sector — declined 4.8% in the fourth quarter, compared with the average analyst estimate of a 5.3% decrease. Adjusted earnings of $2.72 a share beat expectations. The quarter ran through early February and included the holiday season, retailers’ annual time to shine. 

The company projects comparable sales will range from a decline of 3% to flat in the current year, while adjusted earnings will be $5.75 to $6.20 a share, roughly in line with Wall Street’s expectations. Best Buy previously lowered its 2024 sales guidance in November, projecting a decline of 6% to 7.5%.

The shares rose as much as 8.1%, the most since November 2022, in New York trading Thursday. The stock was up 1.8% this year through Wednesday’s close, trailing the 6.3% rise of the S&P 500 Index. 

“As our industry returns to growth, we expect to grow our sales and expand our operating income,” Chief Executive Officer Corie Barry said on an earnings call. 

The Richfield, Minnesota-based retailer has struggled with declining sales in recent years following the pandemic-era bump when consumers opened their wallets to upgrade their electronics and home appliances. Shoppers have since hit pause on those purchases, returning to pre-pandemic behaviors. Consumers have also cut discretionary spending and become more selective in what they buy due to higher inflation and interest rates. Electronics and other higher-ticket items have been especially susceptible to softer demand. Best Buy said Thursday that it expects sales to stabilize across the industry this year.

Innovation Normalizing

Innovation in consumer electronics products slowed due to supply-chain constraints during the pandemic and is returning to a more normalized pace, Barry said. Best Buy expects sales of computing products to improve through the year and show growth, as consumers turn to newer products like those featuring artificial intelligence. Laptop sales turned positive in the fourth quarter and have remained so in the current quarter. 

Moderating inflation, continued low unemployment and improvements in consumer confidence likely will help the rebound of the sector, she added. 

Home theater, appliances, mobile phones and tablets were the biggest contributors to the sales decline for the quarter, while gaming grew. The company said it incurred $169 million of restructuring charges in the quarter, mainly for employee termination benefits, and it expects about $10 million to $30 million of additional charges this year.

Best Buy said it plans to open a few outlet centers and new formats, including a number of smaller stores in markets where the company has no physical presence.

Companies’ earnings have repeatedly highlighted that consumers are resilient, but increasingly making trade-offs. Walmart Inc., the world’s largest retailer, posted stronger-than-expected sales and profit in the fourth quarter as shoppers stuck to necessities. Home Depot Inc. and Lowe’s Cos. reported sales declines as high mortgage rates damped demand for home improvement. Major retailers Target Corp., Costco Wholesale Corp. and Kroger Co. report earnings next week.

Best Buy has been renovating its stores and holding less inventory on the shopping floors amid the rise of online shopping. It’s also dedicating more space for fast-growing categories such as PC gaming and is working to expand its paid membership program, which offers customers perks such as tech support and faster shipping.

(Updates with shares in fourth paragraph, CEO comments starting in fifth paragraph.)

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