Frugal Shoppers, slow traffic till the week before Christmas and sales declines in Europe and Canada led Best Buy Company Inc . ( BBY ), the leading specialty retailer of consumer electronic products, to post lower-than-expected sales results for the five-week period ended December 31, 2011. However, this compared favorably with the prior-year period.
Best Buy registered a decrease of 1.2% in comparable store sales for December 2011 compared with a decline of 4% in the prior-year period.
Adding to the gloom is the company's poor performance versus its peers. Among Best Buy's competitors, Target Corporation ( TGT ) marked an increase of 1.6% in comparable store sales for December 2011, while Costco Wholesale Corporation ( COST ) registered an increase of 7%.
Richfield, Minnesota-based Best Buy stated that total sales for December 2011 remained flat at $8.4 billion compared with the prior-year period.
Domestic segment revenue inched up 0.4% to $6.5 billion in December 2011. However, comparable-store sales inched down 0.4% compared with a decrease of 5% in December 2010.
The Domestic segment experienced comparable-store sales growth across mobile phones (up 20%), and tablets and eReaders (up in low triple-digits). These were offset by a fall witnessed across digital imaging and gaming (down in low double-digit) as well as televisions (down in mid single-digit).
Amid the challenging environment, Domestic online channel brought back the company's smile as the segments revenue jumped 26%. The spike in revenue reflected a rise in traffic due to lucrative discounts and free shipping offered by the company.
International revenue inched down 1.7% to $1.9 billion, reflecting a 4.3% decrease in comparable-store sales. The segment registered a decline in comparable store sales in Europe and Canada. However, the decreases were offset in part by the new stores' strong performance.
Further, it is to be noted that sales results of countries other than Canada in the International segment are reported on a two-month lag.
Despite its soft performance during the busiest shopping season of 2011, Best Buy stood by its earlier projection for fiscal 2012 and expects adjusted earnings in the range to $3.35 to $3.65 per share.
Currently, Best Buy retains a Zacks #3 Rank, which translates into a short-term "Hold" rating. Moreover, considering the company's fundamentals, we have a long-term 'Neutral' recommendation.