Best Buy reports lower revenue due to declining mobile phone sales, sees continued ‘softness’
Retailer sees consumers to online shopping, hurting brick and mortar retailers like Best Buy; mobile phone sales slow ahead of new product launches
The brick and mortar retail space continues to be weak as consumers move from shopping at store locations and instead buy online. One of those retailers with the most to lose in the shift is Best Buy, one of the few major retailers left in the consumer electronics space.
This morning Best Buy reported that second quarter sales were $8.9 billion, down 4 percent versus the same quarter last year.
“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,” Hubert Joly, Best Buy president and CEO said. “As a result, traffic to our brick and mortar stores continued to decline, yet our in-store conversion and online traffic continued to increase due to the execution of our Renew Blue strategy which is in direct alignment with this shift.”
For Best Buy, a small decrease in sales can have a major impact on the bottom line. Net income fell 40.7 percent to $147 million, from $248 million one year ago.
“We are also seeing ongoing softness in the mobile phone category ahead of highly-anticipated new product launches,” Sharon McCollam, Best Buy’s CFO 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.”
Apple will announce its new iPhone models on September 9th, and any new iPad models about six weeks later (though that date has not yet been announced).
Best Buy stock, which rose yesterday in anticipation of this morning’s earnings report, was falling modestly in pre-market trading.