Best Buy reports solid holiday but expects soft FY16 sales

Minneapolis – Best Buy Co. Inc. had a happy holiday season, but the New Year is not looking so bright. The retailer is predicting flat to negative enterprise same-store sales during the first half of fiscal 2016.



Best Buy is basing this prediction on external pressures such as declining consumer excitement about high-profile products that sold well during the holidays, deflationary pricing and declining purchases of extended warranties.



In addition, Best Buy expects that incremental investments in areas such as inventory availability, mobile phone installment billing, supply chain, including faster delivery, and more effective and relevant marketing will reduce operating income in the first half of the year.



In more positive news, domestic revenue of $10.13 billion during the nine-week 2014 holiday period increased 4.1% from $9.73 billion a year earlier. Same-store sales at U.S. stores rose 3.4%. Domestic online revenue of $1.49 billion increased 13.4% on a comparable basis due to improved inventory availability made possible by the chainwide rollout of ship-from-store capability in January 2014, higher conversion rates and increased traffic driven by greater investment in online digital marketing.



“A compelling merchandise assortment, strong multi-channel execution, and a more favorable year-over-year macroeconomic environment drove these better-than-expected results,” said Hubert Joly, president and CEO of Best Buy. “We were also able to capitalize on the product cycles in large screen televisions and mobile phones. These two categories were the primary drivers of our year-over-year revenue growth, more than offsetting significant weakness in tablets.”