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Best Buy Q4 Entertainment Sales Plummet

1 Mar, 2017 By: Erik Gruenwedel

Weak demand for video game discs undermines category

Best Buy March 1 reported same-store entertainment sales dropped 18.6% in the fourth quarter (ending Jan. 28), compared to a slight increase during the previous-year period. The category represented 9% ($1.1 billion) of Best Buy’s $12.3 billion in domestic revenue, down from 11% ($1.3 billion) a year earlier.

The entertainment category includes Blu-ray Disc and DVD movies, TV shows, music CDs and video games.

CEO Hubert Joly said revenue was hindered by unprecedented product availability constraints across multiple vendors and categories, only some of which were anticipated.

“Additionally, there was considerably weaker-than-expected demand in the gaming category,” Joly said in a statement.

On the company's fiscal call, Joly said management had expected some decline in gaming sales heading into the quarter, but the level of industry softness across both hardware and software was much steeper than anticipated. Notably, the fourth quarter is a much more material quarter for the gaming category, as 50% of the annual revenue from gaming occurs in the period.

Indeed, The NPD Group reported total video game sales in January fell 4% from the previous-year period to $610.7 million — despite a 14% uptick in software sales to $312.5 million. Software sales, which include console, portable, physical and digital, topped $274 million in the previous-year period.

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