Fears over poor holiday season performance at Best Buy proved well founded – and the main reason was people didn't buy enough new smartphones.
The Richfield-based retailer announced Thursday its U.S. revenue fell 0.8 percent over the Christmas period and sales were down 1.2 percent.
Company CEO Hubert Joly said much of this drop over the nine-week season was driven by a decline in cellphone sales, telling reporters on a conference call the lack of a new iPhone affected sales.
"There was not a newness factor in the iPhone," he said, according to the Star Tribune. "The iPhone 6S was merely an incremental change from the iPhone 6."
Joly did point out, the newspaper notes, there was better performance in TV, appliances and wearable fitness tracker sales. Online revenue also grew 12.6 percent.
The fall in sales and revenue comes amid a wider fall in sales of consumer electronics this past Christmas – and Best Buy may well have outperformed a lot of the competition.
In its news release, the retailer notes comparable electronics sales fell nationally by 4.85 percent over the holidays, and Best Buy's performance was better than that.
Retailers struggle with lack of new products
It was reported last fall shoppers were expected to "hold back" on their electronics spending over the holidays, which was put down to a combination of a "lack of popular electronic products and sluggish wage growth."
Best Buy launched an aggressive sales campaign in anticipation of this, with price cuts on products such as the Apple Watch and the iPad 2, which has potentially softened the blow of an overall downturn in their corner of the retail market.
"These results and our outlook are driven by the solid execution of our holiday strategy and the leveraging of investments in our merchandise assortment, digital capabilities, higher in-stocks, Blue Shirt and Geek Squad expertise and faster shipping," Joly said.
The Wall Street Journal notes consumer electronics manufacturers have struggled with the limited appetite among consumers to make big electronics purchases.
Chinese parts suppliers hinting at slower iPhone production, Samsung has admitted pressure on smartphone sales, and camera-maker GoPro announced job cuts after weak holiday sales.
Best Buy's overall revenue dropped by 3.6 percent to $10.96 billion over the holiday period, much of which has been put down to its move to close 66 Future Shop stores in Canada last year.