Best Buy's Disappointing Sales Emblematic of Difficulties Brick-and-Mortar Retailers Face
By: The Washington Post August 29, 2014
Big-box electronics giant Best Buy reported sagging second-quarter sales Tuesday amid increasingly intense competition from rival retailers.
The company's comparable sales dipped 2 percent in the U.S., though it still managed to post $146m in profit, largely thanks to a long-term cost-cutting program. But with few new electronics products to capture consumers' attention, the rest of 2014 isn't looking any sunnier.
Chief financial officer Sharon McCollam said in a conference call with investors that she expects to see comparable sales decline “in the low single digits” in both the third and fourth quarters, including the crucial holiday shopping season.
Best Buy has in recent years become emblematic of the broad challenges facing traditional retailers. At a time when shoppers are spending more and more dollars online, Best Buy has found it increasingly difficult to wring money out of its 1,400 stores, which are especially costly due to their large footprints. Meanwhile, the Web has created a transparency around pricing and promotions that has forced Best Buy and many retailers to adopt low prices, and in doing so, hurt their profit margins.