Best Buy Lowers Guidance After Holiday Revenue Drops
Best Buy lowered its fourth quarter outlook on Thursday after reporting a decline in same-store sales during the holiday season.
The Richfield-based electronics retailer took in $10.96 billion in revenue over the nine-week period ending January 2, 2016. During the same timeframe last year, Best Buy reported $11.37 billion in revenue—amounting to a 3.5 percent drop. Its same-store sales fell 1.4 percent as well.
In a statement, Best Buy CEO Hubert Joly said the decline was “primarily driven by the mobile phone category, which was softer than both our expectations and the prior year.”
During the holiday season last year, Best Buy’s computing and mobile phones department made up nearly half of its revenue (approximately 44 percent). That percentage fell by 2 points in the retailer’s most recent report, while its revenue for appliances, televisions and other consumer electronics increased.
Joly told reporters in a Thursday morning conference call that Best Buy sold one out of every two 4K televisions in the nine-week period. Smartwatches and wearable fitness trackers performed well, as did its home theatre department, in part to growth in its online presence.
“Online revenue increased 12.6 percent on top of a 13.4 percent increase last year,” Joly said, nodding to the free shipping promotion the retailer ran from October to January.
Best Buy said it would not be shifting its international outlook, where it anticipates revenue declines of approximately 30 percent for the fourth quarter. The double-digit drop is a result of Best Buy’s consolidation of its Future Shop brand, a Canadian electronics retailer it purchased in 2001 for $580 million. In March 2015, Best Buy said it would close 66 Future Shop stores and convert the remaining 65 stores to the Best Buy brand. Ultimately, Best Buy’s holiday sales outside of the U.S. dropped more than 26 percent versus last year.
Over the past 12 months, Best Buy shares have fallen by 27 percent. In reaction to Best Buy’s holiday sales results, company stock dipped another 8.8 percent to $26.70 after premarket trading.