In the face of a quiet quarter for mobile phone launches, comparable sales in Best Buy's domestic computing and mobile phone segment declined 3.5 percent during the first quarter. Though that drop is an improvement from the fourth quarter's 6.8 percent slide, it's more pronounced than the dip from the prior-year period. These categories are crucial for Best Buy's sales growth, as they account for roughly half its U.S. revenue.
Meanwhile, the electronics chain pinned its hopes for revenue growth on back half of the year, when new products (read: the iPhone 7) are expected to go on sale.
This broad-based slowdown in spending on mobile phones and tablets contributed to the 8 percent dip in Best Buy's shares Tuesday, as blockbuster online sales growth, a beat on both the top and bottom lines, and unchanged full-year guidance weren't enough to convince shareholders to stick around.
Adding pressure to the chain's shares, Best Buy announced the departure of its "rock star" CFO Sharon McCollam, who had been critical to the brand's turnaround.
"We can't imagine seeing U.S. comps [improve] meaningfully for the foreseeable future," Citi analyst Kate McShane told investors after the company's report. "4K TV sales have sold well but haven't been enough of a game changer to offset weakness in other areas like phones, tablets, PCs and video games, and the next generation of iPhones may not be significant enough to materially move the needle."