Best Buy Co. Inc. (Richfield, Minn.) blamed deep discounting and the drying up of the smartphone market for its bleak holiday performance.
The company announced that revenue fell during the all-important nine-week shopping season and same-store sales in the U.S. dropped 0.9 percent.
Best Buy ceo Hubert Joly said the company asked itself, about discounting, “Do we make the incremental investment necessary to be price-competitive and defend our market share?” He said the answer did not result in higher sales and came with a higher-than-expected cost.
One particular weak spot was smartphone sales, which have slowed down across the industry.
Best Buy cfo Sharon McCollam said part of the problem for mobile device sales was “there was not as much newness.”
Best Buy continued to dominate the Apple iPhone business. About 12 percent of iPhones sold in the United States are through Best Buy, according to Michael Levin of Consumer Intelligence Research Partners (Chicago), which tracks sales of Apple devices through different retail channels. “But,” he said, “Best Buy can’t make a business out of selling Apple iPhones and Apple tablets. “You’re not going to meet your expectations just doing that.”
Best Buy said one reason for the disappointing quarter was a shortage of some high-end phones. For example, Apple’s iPhone 5S was in short supply for several weeks after its release. And sales of iPhones did not compensate for slow sales from HTC, BlackBerry and Nokia.