Best Buy Reports Slowed Online Sales Growth, Shares Drop

Best Buy (BBY) has maintained a strong presence in the retail sector despite Amazon’s dominance, but the brick-and-mortar electronics chain took a hit on the stock market Tuesday after reporting second-quarter earnings. Shares of Best Buy dropped by more than 7 percent in the early hours of trading after reporting slowed growth and a lower-than-expected forecast for the third quarter.

Best Buy’s earnings report noted a 10.1 percent rise in U.S. online sales, which was significantly lower than the same figure in previous quarters. The Minnesota-based company recorded a 31.2 percent rise in online sales in the second quarter of its last fiscal year, per Reuters.

The slightly lower earnings forecast for the next quarter appears to have eroded some investor confidence. Best Buy boasts more than 1,000 locations nationwide, but also offers a robust online sales interface, much in line with other major retailers and e-commerce giants.

Best Buy CFO Corie Barry noted in a statement in the earnings report that the company’s strategy might not be conducive to the same amount of growth every quarter. Barry said Best Buy is playing the long game, instead.

“Similar to the past several years, we remain focused on managing the business for long-term success rather than ensuring a straight-line quarterly operating income rate performance,” Barry said in Best Buy’s earnings report.

Tuesday’s stock dip was similar to how investors reacted in May to Best Buy’s last earnings report. Best Buy also reported significantly slowed down online sales growth but also reported strong sales overall.

Still, Best Buy may be in much better position than it was less than a decade ago. Like most retailers, Best Buy has dealt with the rise and prevalence of Amazon. Consumers may treat Best Buy like a showroom for consumer electronics that they would then buy from Jeff Bezos’ e-commerce behemoth, rather than buying anything at Best Buy itself, according to the Los Angeles Times.

An aggressive price matching policy gave customers an incentive to shop at Best Buy more in recent years. As such, the chain has survived and reported strong sales despite competition from Amazon.