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Mobile phone sales hurt Best Buy’s holiday quarter

BY Gina Acosta

Holiday sales declined at Best Buy and the company reduced earlier guidance even though CEO Hubert Joly said the company’s seasonal strategy was well-executed. What’s up with that?

In fact, lackluster consumer interest in electronics led Best Buy to report a decline in same store sales of 1.4% over the nine week period ended Jan. 2. Revenue declined .8%.

“The domestic decline was primarily driven by the mobile phone category, which was softer than both our expectations and the prior year," said Hubert Joly, Best Buy chairman and CEO. "Excluding mobile phones, domestic revenue increased year over year due to our strong performance in health & wearables, home theater and appliances. Online revenue increased 12.6% on top of a 13.4% increase last year. In addition, we saw a significant improvement in our Net Promoter Score. From a financial perspective, despite a slightly softer-than-expected topline, we are improving our fourth quarter operating income rate outlook as a result of our continuing conviction to a disciplined promotional strategy and strong expense management.”

The release of weak holiday results from Best Buy follows a wave of similarly disappointing numbers from other retailers. Chain Store Age has chronicled retailers' holiday performance here and here.

Regarding Best Buy's growth in e-commerce, Moody’s Lead Retail Analyst Charlie O’Shea said: “Best Buy’s march online continues, with online sales increasing 12.6% year-over-year for the period on top of 2014’s over 13% growth, resulting in an annual online sales level that we estimate is now around $6 billion."

“These results and our outlook are driven by the solid execution of our holiday strategy and the leveraging of investments in our merchandise assortment, digital capabilities, higher in-stocks, Blue Shirt and Geek Squad expertise and faster shipping," Joly added. "Ultimately, this performance is the result of the hard work, dedication and customer focus on the part of all of our associates.”

Based on the holiday results, Best Buy updated its fourth quarter outlook as follows:

• In the Domestic business, Best Buy expects a revenue decline of near 1.5% versus a previous expectation of near flat due to softer consumer demand in mobile phones and greater-than-expected declines in the NPD-reported categories.

• A non-GAAP operating income rate decline of 10 to 15 basis points versus a previous expectation of a rate decline of 20 to 35 basis points.

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Timberland climbs to new seamless experience heights

BY Dan Berthiaume

Outdoor retailer Timberland will use mobile technology to deliver a personalized, omnichannel environment in its flagship in New York’s Herald Square.

The retailer is working with in-store technology provider CloudTags to blend physical and digital customer experiences in the store. Through the use of customer-facing tablets powered by near field communication (NFC) and beacon technology, Timberland customers will be able to digitally and socially engage with every product in the store, without being required to sign-up, download an app or initiate registration.

Shoppers will receive a guided Timberland experience, with rich digital product information, styling options and recommendations. They will be able to build an online collection of products and when finished, can choose to opt-in via email and receive personalized content related to their store visit.

Timberland’s seamless store experience will also include interactive “tap walls” featuring an assortment of exclusive merchandise via a digital installation. Using the CloudTags Nimbus in-store recommendation engine, customers can shop from an extended range of styles, colors and sizing, based on their location and interests, that otherwise would only be available online. On the back end, using CloudTags’ Connected Commissions solution, all related online sales that occur following the store visit will be attributed back to the store and associate.

“Consumers use technology to shop where and when they want, and with a partner like CloudTags we can help them discover, shop and socialize, while getting immersed in the Timberland brand,” said Kate Kibler, VP of direct to consumer at Timberland. “CloudTags can help us better understand our customers’ preferences in-store, online and post-visit. These invaluable insights can enrich the shopping experience by allowing customers to interact with our products in exciting, innovative ways.”

Mobile devices and interactive shelf-edge technologies like beacons allow retailers to turn their stores into fully functioning omnichannel touch-points. Customers can use connected devices to navigate a digitally personalized experience with access to the full corporate product assortment, while inside the confines of the store. Timberland is carving a trail to the next summit of seamless shopping with this pilot.

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Chain to increase employee wages — without cutting hours

BY Marianne Wilson

Sheetz, the family-owned and operated convenience store chain, announced it will invest more than $15 million to raise the wages of store employees across the company. And it is doing so without cutting back on hours for full-time employees.

"While other businesses in the industry might have to cut back on employee hours or new hires as a result of wage increases, Sheetz is working hard to provide full-time hours to as many employees as possible, providing them with an opportunity to earn more and secure health benefits," said Stephanie Doliveira, VP of human resources at Sheetz.

Wages will generally increase between 5% and 10%, based on position and years of service, the Winston-Salem Journal reported.

"As a family-owned business, we're committed to attracting, retaining and developing the best people,” Doliveira stated. "We believe that paying wages at the upper end of the retail scale is necessary to achieve that goal.”

Sheetz operates over 500 stores throughout Pennsylvania, West Virginia, Virginia, Maryland, Ohio and North Carolina.

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