The folks in the electronics and entertainment area at Walmart had to be smiling this week at Best Buy’s admission that it lost market share to discounters during the third quarter. The share loss resulted in a 5% same-store sales decline at U.S. stores that was well below guidance that called for flat to modest growth. Earnings per share of 54 cents were well below consensus estimates of 60 cents and full-year guidance was reduced to a range of $3.20 to $3.40 from a range of $3.55 to $3.70. The sales shortfall was caused by weakness in such categories as televisions, notebook computers and gaming, according to the company.
“Much of the industry’s promotional activity on TVs this quarter was centered on third tier brands as loss leaders,” CEO Brian Dunn said during a conference call. “Our value proposition is based on the best selection of the world’s greatest brands with leading-edge technology and great prices.”
The revelation of further market share losses to unidentified discounters is noteworthy because it’s been less than a year since Best Buy ran a somewhat confrontational TV spot that disparaged the product knowledge of employees working in Walmart’s electronics department.