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Boring smartphones are to blame for Best Buy’s terrible holiday sales

January 16, 2014
Obsession
Mobile Web
January 16, 2014

Best Buy’s December sales have been received so poorly by the markets this morning that the company’s founder and chairman emeritus Richard Schulze felt compelled to issue a statement reaffirming support of management’s turnaround strategy.

Plenty of things went wrong, but one thing we noticed is how smartphones were actually a headache for the electronics retailer during the critical holiday period.

The company’s press release notes that its sales declined in categories including “digital imaging” (think cameras) and MP3 players—two products that have basically been supplanted by the smartphone. But more surprisingly, roaring smartphone sales didn’t make up for those falls. Computers and mobile phones account for about 46% of its total revenue in the US, but December same-store sales in the segment increased 3.2%, compared to a rise of 12.1% a year ago.

On the conference call, CEO Hubert Joly chalked this up to lackluster smartphone technology: “The technology evolution of the latest model was not extraordinarily compelling for the consumers. But there was one or two models that were in high demand and in relatively short supply.”

Chatter abounded about Apple’s iPhone 5S and to a lesser extent the 5C being in short supply in the months leading up to December. According to reports last month, Apple had rectified supply issues for its own website at least, but perhaps not for other retailers.  As for Samsung, its earnings report on Jan. 24 should paint a clearer picture of the success of its latest Galaxy release. Assuming the two models Joly was referring to were Apple phones, his comments and some recent sales suggest that with Samsung, consumers weren’t that interested.

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