Best Buy Reports Holiday Sales Data, Cautious Fiscal 2016 Comments

Best Buy Co Inc (NYSE: BBY) reported on Thursday that its domestic comparable-store sales for the nine weeks ended January 3, 2015 rose 2.6 percent, an improvement from the 0.9 percent decline the company saw in the same period a year ago.

Revenue totaled $11.366 billion (including $1.233 billion from the company's International segment), compared to $11.130 billion a year ago.

Online sales grew 13.4 percent during the quarter, less than the 23.5 percent growth a year ago. The company commented that the slower growth rate was due to the 600 basis points of pressure relating to last year's initial rollout of ship-from-store and the launch of two gaming consoles, along with an industry wide decline in tablets (a category with a strong online penetration).

Shares of Best Buy were down more than 7 percent at $36.70 in the premarket.

Forward Looking Comments

Best Buy's CEO Hubert Joly outlined the foundations for the company's fiscal 2016 operating plan which includes a focus on driving growth initiatives around key product categories, life events and services. The executive added that “there are external pressures” driving industry changes including deflationary pricing, weak industry demand in several Consumer Electronics categories, declining demand for extended warranties and exchange rate volatility.

Joly warned investors that “to win against this backdrop, we have to lead – which requires investing now” and that as result this will place pressure on the company's non-GAAP operating income rate as early as the first quarter fiscal 2016.