The company warned that US sales for the fourth quarter, which ends later this month, are expected to be down about 1.5%. But Best Buy may have to be proactive on the store closure front ahead of what could be another challenging year for sales.
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Best Buy said that domestic same-store-sales, a key measure of a retailer’s health, fell 1.2 percent in the nine-week period ended January 2 compared with growth of 3.4 percent during the same period a year prior.
Best Buy’s good news here, aside from its web sales increase, is that its adjusted operating income rate is expected to decline 10 to 15 basis points, compared to its previous expectation of a rate decline of 20 to 35 basis points.
Best Buy’s mobile business may have been hurt by a dearth of “must-have” models – iPhone 6s was an off-year update of the 6 – and by a plethora of affordable, fully-featured unlocked phones, available direct from vendors. Categories with strength included wearable technology, home theater, and appliances.
Joly said technology innovations are expanding into other categories like clothing, and he expects Best Buy to embrace that.
Consumer demand across retail remained uneven during the holiday season, Chief Executive Hubert Joly said on a conference call. It’s also been rolling out services like shipping goods from all its stores, which means speedier deliveries.
During the holidays, Best Buy took an aggressive stance on free shipping, joining Minneapolis-based Target, in offering that as a promotion on online orders no matter the order size.
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Discouraged investors crushed Best Buy stock (BBY) in pre-market trading, sending shares down 8% to $26.98.
