(Reuters) -Best Buy reported a smaller-than-expected drop in quarterly comparable sales as holiday deals led shoppers to spend on big-ticket purchases like electronics and home appliances, sending its shares up 3% before the bell.

Consumers, however, remained cautious as higher borrowing costs force them to make trade-off decisions to cover for household essentials.

Still, Best Buy's focus on its paid membership programs during the peak holiday shopping season resulted in customers opting for its product services and delivery.

CFO Matt Bilunas said he expects memberships to help expand gross profit rate in fiscal 2025 by about 20 to 30 basis points compared with 2024.

Gross profit rate for the fourth quarter rose to 20.5% from 20% last year.

Best Buy said it took $169 million in charges, mainly related to employee termination benefits tied to its restructuring plan that commenced in the quarter.

Best Buy earned $2.72 per share, compared to LSEG estimates of $2.52

The top U.S. electronics retailer's fourth-quarter comparable sales fell 4.8%, its ninth straight quarterly decline, compared to analysts' average expectations of a 5.36% drop, according to LSEG data.

(Reporting by Savyata Mishra in Bengaluru; Editing by Arun Koyyur)