Best Buy reports lower holiday sales, leading to more store closings

Fewer laptops and earbuds were under the Christmas tree this past holiday season, leading to electronics retailer Best Buy having its most lackluster end-of-year season of the last few years.

In November, December and January, consumers, burdened with higher prices for food, energy and other needs, spent less on home electronics, resulting in revenue dipping about 10% compared to the same time the year before to $14.7 billion. It was the lowest it had been for Best Buy for that season in more than five years.

Best Buy’s profits for the quarter and the year also dropped, though not as considerably as other major retailers like Target, which reported its earnings earlier this week. For the full year, Best Buy’s profit fell more than 42% while Minneapolisbased Target’s dropped 60%.

The electronics retailer dealt with numerous challenges in 2022 that abruptly put an end to a period of pandemic-fueled prosperity. However, for the most part, it was a setback Best Buy executives and Wall Street anticipated.

“Throughout Q4 and FY23, we remained committed to balancing our nearterm response to current conditions and managing well what is in our control, while also advancing our strategic initiatives and investing in areas important for our long-term performance,” Best Buy CEO Corie Barry said in a statement.

Best Buy is closing its Hixson store and 16 other locations this week, leaving the company with only its East Brainerd store in the Chattanooga market.

On Thursday during a call with analysts, Best Buy executives said the company continues to reduce its store footprint and modify its store layouts. Throughout the last three years, Best Buy has closed about 70 large-format stores or 7% of its portfolio. Best Buy plans to close about 20 to 30 large-format stores this year with plans to close an average of 15 to 20 traditional large-format stores per year after that.

Some of Best Buy’s remaining larger stores are being converted into locations where people can have hands-on trials with new products and other stores where there is less sales floor square footage and more backroom space to fulfill orders. It’s a store evolution Best Buy has tested since 2020 when a record number of online sales made it important for the company to analyze how to more efficiently fulfill online orders. It is also opening more smaller-format and outlet stores.

“The purpose of the changes we’re making is, first and foremost, to meet a changing customer,” Barry said, on Thursday.