Tech Product Shortages Drag Down Best Buy
Best Buy’s sales fell 10.4 per cent in 2021, as stock shortages and reduced opening hours meant sales of consoles, games, smartphones, tablets, and services greatly suffered.
The stores also posted a 2.6 per cent drop in sales during the holiday season.
CFO Matt Bilunas warned in November that sales would slow during the quarter (Nov-Jan), conveniently suggesting that many had completed their Christmas shopping in October, to avoid missing out.
Best Buy’s U.S. online sales fell 11.2 per cent compared with a year earlier, again as a result of stock shortages.
“We would have been healthily in our range had we not had some of those very targeted inventory constraints that were just a bit larger than we thought,” CEO Corie Barry said on an earnings call yesterday.
“I think we expect to see some of those [constraints] to continue into especially the first half of next year.”
Best Buy will close between 20 and 30 stores this year, and expects same-store sales to drop 1-4 per cent compared to 2021. In addition, it will need to up its advertising costs to arrest falling sales.
“We do expect higher levels of promotional activity to pressure our gross profit rate” in the coming year, Bilunas told analysts on Thursday’s call.