Forbes Reports: Best Buy Sales Fall As Customers Keep Shopping Online
Best Buy Sales Fall As Customers Keep Shopping Online
That the internet exists might be old news to some — the World Wide Web was created more than twenty years ago, after all — but electronics giant Best Buy is still grappling with its customers’ migration from brick and mortar stores to the world of e-commerce. The retailer revealed Tuesday morning that while it increased its second quarter profit compared to the year-ago quarter, its sales fell as customers continued to stay home and shop on their computers.
Best Buy reported $8.9 billion in second quarter revenue, a 1.5% decline over the $9.3 billion reported this time last year and a figure that came in a little under the $8.97 billion the Street expected. Net income for the quarter was $146 million, resulting in GAAP earnings of 42 cents per share. Excluding special items, Best Buy posted earnings of 44 cents per share, up from the 32 cents per share reported in the year-ago quarter and well above the 31 cents per share analyst consensus.
Domestic same store sales fell 2%, while sales in consumer electronics fell 2.5%. The one bit of good news for the retailer is that for all the customers staying at home, some are at least shopping on BestBuy.com rather than, say, Amazon.com: Best Buy reported that its domestic online comparable sales increased 22% for the quarter.
“Like other retailers and as reflected in this quarter’s performance, we continued to see a shift in consumer behavior: consumers are increasingly researching and buying online. As a result, traffic to our brick and mortar stores continued to decline, yet our in-store conversion and online traffic continued to increase,” Hubert Joly, Best Buy president and CEO, said in a statement Tuesday morning. Joly went on to add that Best Buy’s plan for the future is to capitalize on this shift in shopping patterns.
“Looking ahead, our goal is to continue to create a differentiated multi-channel customer experience such that every interaction customers have with us, regardless of channel, makes them a promoter of the Best Buy brand,” he said. “In support of this, we will be intensifying our investments in customer-facing initiatives across both channels in the back half of the year.”
Despite this goal, Best Buy’s near-term outlook is downbeat at best. Sharon McCollam, the retailer’s executive vice president and CFO, expanded on Joly’s statement and echoed the cautious tone she’s taken in prior earnings announcements. “Industry-wide sales are continuing to decline in many of the consumer electronics categories in which we compete. We are also seeing ongoing softness in the mobile phone category ahead of highly-anticipated new product launches,” McCollam said. “Therefore, absent any change in these declining industry trends and with limited visibility to new product launch quantities, we continue to expect comparable sales to decline in the low-single digits in both the third and fourth quarters.”
Following the release of the earnings results, shares of Best Buy fell more than 4% in early Tuesday trading and are currently down 4.5%. Year-to-date, the stock looks even worse: it’s down 21% since the first trading day of 2014.
Posted on August 26, 2014, in Business News, News & Politics and tagged best buy, Best Buy Sales Fall As Customers Keep Shopping Online, Business News, ecommerce, Forbes. Bookmark the permalink. Comments Off on Forbes Reports: Best Buy Sales Fall As Customers Keep Shopping Online.