Best Buy stock price plummets 28 percent on poor holiday sales figures

Author:
Updated:
Original:

Best Buy's stock price fell 28.5 percent Thursday, after the Richfield-based company reported disappointing revenue during the holiday shopping season.

The Associated Press reported Best Buy's sales fell 0.8 percent during a nine-week period when analysts had expected growth. Best Buy’s total revenue during the holiday shopping season was $11.5 billion, down from $11.8 billion a year ago. The holidays represent the most important time of the year for retailers, where giant chains can make up to 40 percent of their annual sales.

Wall Street's reaction was swift and some analysts pulled no punches with their pessimism toward the electronics retailer.

Two CNBC analysts expect things will get worse at Best Buy. They note that amid intense competition Best Buy matched discounts offered by its rivals but still saw less traffic. They see the holiday numbers as a terrible end to what had once looked like a turnaround year for the company. After falling 49 percent in 2012, Best Buy's stock price had soared 239 percent last year.

CEO Hubert Joly told the network the holiday numbers reinforce Best Buy's determination to cut costs deeper and faster. Joly sees the company's turnaround as a multi-year process, not a three-month or six-month project.

Barron's says Best Buy stock is best sold, even at its newly-lowered stock price. Barron's says matching low prices to avoid becoming "Amazon's showroom" has made for very low margins at Best Buy.

A scathing headline from The Street calls Best Buy "as pathetic as Sears and J.C. Penney." The piece fleshes out the comparison of the big boxes this way: "Each building represents the soulless shell of a once-thriving industry treated with utter disrespect by Jeff Bezos and Amazon.com."

The Star Tribune reports that Joly called the performance a “bump in the road” in a conference call with analysts. He said the company was “outcompeted” in its online operations, noting that Amazon.com did a better job delivering last-minute merchandise to consumers. He also expressed dissatisfaction with the personalization capabilities of the company’s website.

On Best Buy's website, Best Buy Founder and Chairman Emeritus Richard Schulze issued a statement of support for the direction the company has taken.

“Best Buy is on this journey and in this business to win, acquire, and retain new and existing customers," the statement said. "I have complete faith in the long-term strategy and I am confident that management is taking the steps required to win and position the company for a successful future.”

Next Up

Adam Thielen

Vikings place Adam Thielen on COVID-19/reserve list

Thielen is coming off a two-touchdown game against the Cowboys.

MCF Oak Park Heights

COVID-positive inmate at Oak Park Heights prison dies

He becomes the fourth prison inmate to die from the virus.

Screen Shot 2020-11-23 at 1.08.19 PM

2-ton smoker stolen from Twin Cities chef Thomas Boemer

Boemer is the chef behind restaurants including the popular Revival.

Governor Tim Walz

Walz says relief package is coming for Minnesota small businesses

Walz is prepared to call a special session and pass the package immediately.

Governor Tim Walz

Watch live: Gov. Tim Walz COVID-19 press conference Monday

Walz will be introducing a new app that helps Minnesotans track COVID-19 exposures.

Related