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Another day, another US retail stock relegated to the bargain bin.
Shares in Best Buy tumbled more than 9 per cent in pre-market trading on Wednesday after the consumer electronics retailer reported an unexpected drop in fourth quarter sales and forecast further declines for the current fiscal quarter.The company, which is grappling with the disruption caused by e-commerce and the absence of a new “must have” gadgets, said like-for-like sales – a key industry metric – fell 0.7 per cent in the three months to end of January, confounding expectations for a 0.5 per cent increase.
The drop dragged overall revenue for the quarter to $13.48bn, down from the $13.62bn recorded in the prior year period and below the the $13.6bn predicted by analysts.
“Our revenue was hindered by unprecedented product availability constraints across multiple vendors and categories, only some of which were anticipated,” said Hubert Joly, chairman and chief executive.
“Additionally, there was considerably weaker-than-expected demand in the gaming category.”
Best Buy’s struggle to get customers back into its stores shows little sign of letting up and the Minneapolis-based retailer is forecasting same store sales to fall between 1 to 2 per cent during the current fiscal first quarter.
Within this, like-for-like sales in its core US market is expected to decline by 1.5 to 2.5 per cent.
The company sought to assuage investor sentiment with news of a new $3bn buyback that is to be implemented over the next two years and a 21 per cent increase in dividend pay out.
Still, the stock – up 36 per cent over the past 12 months – fell 9.7 per cent in pre-market trading.
Net income for the quarter came in at $607m, or $1.91 per diluted share, up from the $479m, or $1.40 a share reported in the year ago period.