Shares of Best Buy Co Inc (BBY) tumbled on Wednesday after the electronics retailer posted an unexpected decline in same-stores sales in the fourth quarter.
Sales at established stores dropped 0.7% in the quarter. Analysts were expecting a 0.5% increase. The company said weak demand for tables, wearables, gaming consoles and mobile phones hurt sales.
Best Buy projects a 1-2% decline in sales at established stores for the current quarter.
Sharp Decline in Best Buy Stock
Despite the decline in sales, the company’s efforts to cut costs helped net income increase by 27%. Adjusted earnings per share also beat analyst estimates.
Revenue declined 1% to $13.48 billion in the fourth quarter, missing estimates of $13.62 billion. The company posted an adjusted profit of $1.95 per share, which beat projections of $1.67.
Same-store sales in the U.S. fell by 0.9%, missing expectations of a 0.4% increase. Domestic online sales were up by 17.5%, which helped boost the company’s margin.
“Our strong bottom-line performance in the fourth quarter was driven by a disciplined promotional strategy, continued optimization of merchandise margins and strong expense management,” said CEO Hubert Joly in a statement.
The retailer’s stock was down 4% in premarket trade after falling as much as 9% after the report’s release.
Competition from online retailers like Amazon (AMZN) has put pressure on brick and mortar stores. Best Buy isn’t the only retailer that’s struggling to stay afloat in a shifting market.
According to recent reports, hhgregg Inc (HGGG), an electronics and appliances retailer, is filing for bankruptcy in March. GameStop Corp (GME) said fourth-quarter sales were hurt by consumers downloading games instead of buying them in stores.
Best Buy announced on Wednesday that it will accelerate its buyback program to $3 billion over two years from $1 billion. The company also boosted its quarterly dividend.
Along with its fourth-quarter results, the electronics retailer outlined the next stage of its turnaround. The company will focus on expanding its in-home advisory program and finding new ways to cut costs.