Best Buy’s Sales Decline Raises Doubts About Turnaround

[Purveyor]

By Matt Townsend - Jan 16, 2014

Best Buy Co. (BBY)’s decline in holiday sales, which triggered a 29 percent drop in its stock today, is raising doubts over Chief Executive Officer Hubert Joly’s turnaround strategy.

When Joly joined the world’s largest electronics chain in September 2012, he zeroed in on becoming price competitive with the likes of Amazon.com Inc. (AMZN) His theory was simple. Remove price from the purchase decision and consumers would stick with Best Buy because they can find a wide assortment of products, get advice from knowledgeable staff and test gadgets.

That approach failed to boost holiday sales in the U.S., which includes stores and online purchases. Even though the chain aggressively slashed prices, revenue from outlets open at least 14 months fell 0.9 percent in the nine weeks ended Jan. 4, the Richfield, Minnesota-based retailer said today. In addition, Joly’s price cuts will narrow profit margins by twice as much as the company expected in the fourth quarter.

“The holiday results highlight the well-known secular headwinds that Best Buy still faces and raise new questions about the company’s longer-term outlook,” Brad Thomas, a New York-based analyst at Keybanc Capital Markets Inc., wrote in a note to clients.

Thomas, who recommends holding the stock, projected a gain of 1 percent for U.S. same-store sales.

more...

http://www.bloomberg.com/news/2014-01-16/best-buy-u-s-holiday-sales-fall-as-shoppers-spurn-prices.html

[RC]

1. One of the problems is not carrying stuff their web site says is in their store.

You can query their web site, if a particular store has something in stock. It has been my experience they usually don't.

[MicaelS]

2. Oh, FFS.

So a less than 1% sales drop, causes the market to panic, and the stock price to drop 29%? Shows how fucked the market is.

[infoviro]

3. Good!

I celebrate the death of all corporations. Couldn't happen quick enough.

[NightWatcher]

4. "knowledgeable staff" good one!

It's a pain in the ass to deal with one of these places.

[Boom Sound 416]

5. Another problem is

You can't buy your groceries, under garments and motor oil while shopping for a gizmo.

[Omaha Steve]

6. BB never got the bounce from Circuit City going under in 2009 they expected

That was a warning sign. I really believe BB can stay afloat. One good sign is the Crossroads location has the same assistant manager it had 20 years ago. And that store competes with the Nebraska Furniture Mart just a few blocks away. The largest furniture and electronics store under one roof in the USA.

OS