Holiday sales declined at Best Buy and the company reduced earlier guidance even though CEO Hubert Joly said the company’s seasonal strategy was well-executed. What’s up with that? In fact, lackluster consumer interest in electronics led Best Buy to report a decline in same store sales of 1.4% over the nine week period ended Jan. 2. Revenue declined .8%. “The domestic decline was primarily driven by the mobile phone category, which was softer than both our expectations and the prior year," said Hubert Joly, Best Buy chairman and CEO. "Excluding mobile phones, domestic revenue increased year over year due to our strong performance in health & wearables, home theater and appliances. Online revenue increased 12.6% on top of a 13.4% increase last year. In addition, we saw a significant improvement in our Net Promoter Score. From a financial perspective, despite a slightly softer-than-expected topline, we are improving our fourth quarter operating income rate outlook as a result of our continuing conviction to a disciplined promotional strategy and strong expense management.” The release of weak holiday results from Best Buy follows a wave of similarly disappointing numbers from other retailers. Chain Store Age has chronicled retailers' holiday performance here and here. Regarding Best Buy's growth in e-commerce, Moody’s Lead Retail Analyst Charlie O’Shea said: “Best Buy’s march online continues, with online sales increasing 12.6% year-over-year for the period on top of 2014’s over 13% growth, resulting in an annual online sales level that we estimate is now around $6 billion." “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 added. "Ultimately, this performance is the result of the hard work, dedication and customer focus on the part of all of our associates.” Based on the holiday results, Best Buy updated its fourth quarter outlook as follows: • In the Domestic business, Best Buy expects a revenue decline of near 1.5% versus a previous expectation of near flat due to softer consumer demand in mobile phones and greater-than-expected declines in the NPD-reported categories. • A non-GAAP operating income rate decline of 10 to 15 basis points versus a previous expectation of a rate decline of 20 to 35 basis points.
