UPDATE 1-Best Buy says holiday sales fall; shares tumble
NEW YORK, Jan 16 (Reuters) - Best Buy Co Inc reported a drop in total revenue and sales at its established U.S stores in the all-important holiday season, sending shares tumbling more than 30 percent in early trading.
The retailer cited intense discounting by rivals, supply constraints for key products and weak traffic in December.
Best Buy's report was the latest evidence that holiday sales at many U.S. retailers came at the expense of margins.
The world's largest consumer electronics chain decided to cut prices aggressively to thwart fierce competition from Wal-Mart Stores Inc and other rivals in what turned to be one of the most promotional seasons since the recession.
"The promotional intensity that began with Black Friday continued throughout the period," said Chief Executive Officer Hubert Joly, who now expects the additional discounts to lead to a drop in margins.
The decision to discount aggressively, however, boosted Best Buy's market share at a time when overall industry sales fell, Joly said, citing data from research firm NPD Group.
Sales at stores open at least 14 months were down 0.9 percent in the United States and up 0.1 percent internationally in the nine weeks ended Jan. 4. Total revenue fell about 2.6 percent to $11.45 billion in the nine-week period.
Best Buy expects the fourth-quarter operating margin, excluding items, to be 175 to 185 basis points lower than the year-ago period.
Best Buy shares tumbled 30.3 percent to $26.10 in premarket trading.