Best Buy Reports Holiday Sales Gain15 Jan, 2015 By: Erik Gruenwedel
Consumer electronics retailer saw 0.4% uptick in entertainment revenue
Best Buy Jan. 15 reported $10.1 billion in domestic winter holiday sales through Jan. 3, a 4.1% increase compared with the prior-year period.
The Minneapolis, Minn.-based consumer electronics retailer cited big-screen televisions and mobile phones as the primary product drivers, offsetting declines in tablets.
Entertainment, which includes packaged-media movies, video games, music and CinemaNow, generated a 0.4% sales increase compared with a 6.6% decline a year ago. Entertainment represented 12% of domestic revenue, the same as a year ago.
Domestic same-store sales increased 2.6% from a 0.9% dip a year ago. Comp store sales increased 3.4% when including the benefit of mobile phone installment billing. Online sales increased 13.4% year-over-year to $1.49 billion.
Indeed, increased online marketing helped drive in-store foot traffic, combined with Best Buy’s policy of shipping orders directly from local stores.
“Last quarter, we said that we would execute a highly disciplined operating and promotional plan that would drive a better year-over-year financial outcome for our shareholders. Today … we have delivered just that,” CEO Hubert Joly said in a statement.
However, Joly warned that expectations in the first quarter should be tempered by ongoing structural changes in the industry, including deflationary pricing, weak demand in key product categories, declining consumer interest for extended warranties, and volatile exchange rates in Best Buy’s international businesses.
To combat that, Best Buy is upping marketing and other “growth” initiatives in the new year, which Joly said would pressure Q1 results.
“To win against this backdrop, we have to lead — which requires investing now,” he said.