Best Buy's stock opened at a 30 percent decrease Thursday as the company announced its holiday season numbers, which were anything but jolly.
Best Buy reported these earnings only one day after retailer J.C. Penney announced an upcoming layoff of 2,000 workers. Other retailers including American Eagle Outfitters and Express have reported significant revenue drops as well. (Via USA Today)
Best Buy's new Chief Executive Hubert Joly said in a statement that the store had to sacrifice revenue during the holiday season by offering huge discounts in order to stay competitive and hold onto its market share.
As a business writer for Slate puts it, "In other words, Best Buy and others cut prices to try to stay competitive with Amazon, and margins suffered as a result."
According to The Wall Street Journal, Joly stepped into the leadership role amid concerns the store was becoming a testing ground for products consumers would purchase online later.
But offering discounts wasn't the only reason why Best Buy's seasonal numbers declined. Joly also said the store had a drop in holiday traffic, poor mobile phone sales and trouble with keeping big-name, high-end products on shelves.
Game consoles like PlayStation 4 and Xbox One were nearly impossible to keep stocked this season based on supply — not demand. Usually, these products make up a large part of holiday sales. (Via Sony)
Still, it's not all bad in the land of Best Buy. Despite the decline, the company reports a 23.5 percent increase in domestic online sales. Of course, that doesn't exactly bode well for the future of brick-and-mortar stores — or should we say showrooms?