Best Buy Co. Inc. (NYSE: BBY) shares were crushed in premarket trading Thursday after the company reported disappointing holiday sales and forecast a larger-than-expected decline in quarterly operating margins.
The largest consumer electronics chain in the United States attributed the disappointing results to intense discounting during the holiday season by rivals such as Wal-Mart Stores Inc. (NYSE: WMT) and Amazon.com Inc. (NASDAQ: AMZN), tight supplies of tablets and phones, and weak traffic in December. And Best Buy said it expects its operating margin, excluding items, to be 175 to 185 basis points lower in the current fiscal fourth quarter than a year ago.
Same-store sales at Best Buy were down 0.9% in the United States and up 0.1% internationally in the nine weeks that ended Jan. 4. In that time, total revenue fell about 2.6% to $11.45 billion.
Best Buy has long suffered from “showrooming,” or consumers who check out the merchandise in the store and then go buy the goods online, usually at Amazon. Efforts to woo customers back with steep discounts, free shipping and a redesigned website appear to have had little effect.
Investors were not pleased with the news. Shares dropped about 31% in premarket trading Thursday and opened the regular session near $26.01. The 52-week trading range is $13.83 to $44.66.
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