Best Buy Reports Holiday Sales Bump, But Stock Still Slides
Best Buy delivered good holiday sales news Thursday, but its stock took a tumble after it cautioned that such sales wouldn’t likely persist during the rest of its fiscal fourth quarter.
The Richfield-based electronics retailer’s shares were down nearly 13 percent to $34.77 by midday Thursday, hours after the company unveiled its holiday sales results. That news was positive: U.S. same-store sales for the first nine weeks of its fourth quarter climbed 2.6 percent, exceeding Best Buy’s forecast for flat sales over the period. Holiday season revenue increased to $11.4 billion, up from $11.1 billion last year, and online sales climbed 13.4 percent.
“Altogether, these results reflect the successful delivery of our holiday plan,” CEO Hubert Joly said in a statement.
The company cited mobile phone and flat screen television sales, which it said more than offset weak tablet sales. But Best Buy said mobile phone and home theatre sales trends were partially driven by “excitement around high-profile products and will not likely continue at holiday levels.”
“As such, while we are excited about these investments and confident in our ability to execute against them, we are also appropriately cautious about the pressures,” Chief Financial Officer Sharon McCollam said in a statement, who said the company expects comparable sales in the first half of fiscal 2016 to be flat to negative low-single digits.
Though it’s stock took a beating Thursday, it could always be worse: last year, Best Buy’s stock plummeted almost 30 percent this time last year after it said U.S. holiday sales were weaker during the 2013 holiday period because of low prices, poor in-store traffic, a disappointing mobile phone market and supply constraints for key products.
U.S. retail sales hit their largest decline in 11 months in December, but economists cautioned against reading too much into the news in light of holiday spending making it difficult to account for season fluctuations. Minnesota meanwhile showed the biggest gain in the country in holiday retail sales, growing 12.9 percent between November 1 and January 4, according to payment technology firm First Data.
Best Buy said Thursday that its holiday results did not include its China operations, which the company said in December that it would sell. Best Buy will report its full fourth-quarter results on March 3.