Best Buy holiday sales fall, hurt by highly promotional retail environment, softness in US - Yahoo F...

1. Best Buy holiday sales fall, hurt by highly promotional retail
environment, softness in US - Yahoo Finance Canada
Best Buy holiday sales fall, hurt by highly promotional retail environment, softness in US - Yahoo
Finance Canada
By The Associated Press
MINNEAPOLIS - Best Buy said Thursday it had disappointing sales during the holiday shopping
season, raising concerns about the consumer electronic retailer's ability to turn around its business.
Shares tumbled nearly 29 per cent on the news, showing that investors are increasingly worried
about Best Buy's future. Best Buy's stock price had more than quadrupled last year, but had been
down 7 per cent since the beginning of this year.
The holiday season, which runs from November through December, is a critical period for retailers
because it can account for up to 40 per cent of their annual revenue. But this past season was
marked by weak consumer spending and heavy sales promotions by retailers.
Best Buy was struggling even before the holiday season because of increased competition from
online stores, notably Amazon.com, and discounters like Wal-Mart. But under CEO Hubert Joly, Best
Buy started a turnaround strategy that included revamping merchandise, training employees and
cutting costs.
Best Buy went into the holiday season saying that it was unafraid of so-called "showrooming," when
consumers check out items in stores and then purchase them for cheaper online. It also said it would
match prices of all retailers, including cheaper online rivals, but that policy ultimately led to an
unexpected sales decline.
Best Buy CEO, Hubert Joly, also said that there was a lot of competition on price during the holidays
and an "intensely promotional" environment. He added that Best Buy's business was also hurt by
supply constraints for key products, a drop in customer traffic and a disappointing mobile phone
market.
Additionally, Joly said there was an overall decline in the consumer electronics market that no one
was expecting. Indeed, according to research firm NPD Group, consumer electronics sales fell 2.4
per cent to $22.9 billion during the 9-week holiday period.
As a result, total revenue for the nine-week period that ended on Jan. 4 slipped 3 per cent to $11.45
billion from $11.75 billion. Domestic revenue declined to $9.75 billion from $9.91 billion, while
international revenue fell to $1.7 billion from $1.85 billion.
Meanwhile, sales at stores open at least a year -- a key indicator of a retailer's health -- fell 0.8 per
cent. But that was better than the 1.4 per cent decline in the prior-year period.
"Best Buy is in a much better position than it was a year ago," said Morningstar analyst R.J. Hottovy.
"In my mind, the shares now more accurately reflect very competitive retail environment that will be
present in the years to come."

2. Joly said Best Buy's holiday performance renews the sense of urgency around the company's
transformation. He said that key priorities heading into fiscal 2015 will include: lowering costs faster
and more deeply; growing its online business at a quicker pace; continuing to improve the customer
experience; improving marketing efforts and growing its Geek Squad services business.
Joly also said there were no specific plans to close stores, but added that "we have always said on an
ongoing basis that we are looking at the store footprint and we continue to review it."
Shares of the Minneapolis company declined $10.74, or 28.6 per cent, to close at $26.83 after
sinking more than 30 per cent earlier.
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