Dive Brief
- This season, Best Buy protected its market share — but failed to stimulate new demand — with intense price competition, to the point where 4th quarter operating margins will be 175 to 185 basis points below the same quarter last year.
- Total sales for the nine-week period ending Jan. 4 fell to $11.5 billion. U.S. same-store sales fell 0.9%, but online comps increased by 23.5%.
- Wall Street reacted extremely negatively, dropping the company's stock price by $10.74 to $26.83, a decline of 29 percent by Thursday's close.
- During the holiday shopping season, Best Buy experienced soft mobile-phone demand, declines in store traffic, and inventory issues for some products.
Dive Insight
In a holiday saga by now familiar to many retailers, Best Buy took it on the chin in the name of saving market share. The length and intensity of the heavy promotional pressure took the electronics store by surprise. Now it’s time to pay the piper, and Jan. 16's stock descent won't faze the company as it works on its turnaround, said President/CEO Hubert Joly.
“Looking ahead, our holiday performance reinforces our resolve and our sense of urgency around our transformation,” he said, expressing no regrets about working to meet Amazon's pricing and consumers' appetite for deals. The company is stepping up its e-commerce game, cutting costs, working to improve customer personalization and focusing on its Geek Squad services.