Best Buy Canada will see a dramatic reduction in fourth-quarter revenue after a tepid holiday sales season and the fallout from shuttering the Future Shop chain last year, its parent company said Thursday.In a holiday report that released nine weeks’ worth of results ended Jan. 2,Canada Goose i oslo Minneapolis-based Best Buy Co. said international revenue declined 26 per cent to US$911 million in the period compared with a year earlier driven by a foreign currency hit of about 13.5 per cent, operating 68 fewer large-format stores in Canada amid “ongoing softness in the Canadian economy and consumer electronics industry,” the company said in a statement.The company’s international division includes 136 large stores and 56 smaller mobile stores in Canada, as well as 18 large stores and five small format stores in Mexico.
It comes as the Canadian electronics giant battles Amazon, Apple and niche mall players in an increasingly price-competitive market. The company closed down its Future Shop chain last March in a bid to consolidate the brand and lower real estate costs and duplication,Canada Goose i oslo laying off 1,500 part-time and full-time employees.For the fourth quarter ending Jan. 30, Best Buy is predicting a 1.5 per cent decline in U.S. revenue and a bruising 30 per cent decline in its international division.“The whole industry is changing and online sales are really impacting consumer behaviour when it comes to electronics,” said Alex Arifuzzaman, partner in Toronto-based retail real estate specialist InterStratics Consultants.“It is a hypercompetitive area because the margins are very tight. And it is a commoditized area, so it becomes about competing on price. A lot of the high-margin Best Buy items that were making money in the past have also declined — cables, ink cartridges, CDs.” Thursday’s release does not shed light on how much of Future Shop’s lost business has been recaptured by Best Buy, he added.
Best Buy had no comment on the preliminary results on Thursday.Competition has also intensified in recent years in the mall, he noted, as more niche players have sprung up to sell cell phones and accessories, and the continued expansion of Apple stores,Canada Goose i oslo which are smaller and more heavy on one-to-one expert service for the brand.Revenue for the consumer electronics industry declined 4.8 per cent in the nine weeks ended Jan. 2 compared to the nine weeks ended Jan. 3 a year ago, according to NPD Group. That includes sales of televisions, desktop and notebook computers, and tablets — categories that make up about 65 per cent of the company’s domestic revenue. (NPD’s consumer electronics group data does not include mobile phones, appliances, services, gaming, Apple Watch, movies or music).