Best Buy is suffering from declines in its profits as some of its product categories are not selling as much as they have in the past. Best Buy's latest financial press release reported on Tuesday that its net profits for the fiscal quarter that ended on August 27 came in at $177 million, a 30 percent drop from its profits of $254 million for the same period a year ago. Those numbers were below expectations from Wall Street analysts. Revenues for the quarter came in at $11.347 billion, just slightly above the $11.339 billion that the company recorded a year ago.
Best Buy CEO Brian J. Dunn admitted in the company's press release that its numbers for the quarter as well as its future outlook are due to " ... continued macro challenges to overall consumer spending and lower consumer electronics industry sales." The Wall Street Journal reports that shares of Best Buy's stock went down 6.5 percent in trading today after the earnings announcements.
One of Best Buy's problems is that a growing number online retailers, including NewEgg.com and TigerDirect.com, are now selling nearly all of the products available at Best Buy's brick and mortar stores. Those sites can offer a greater variety of items and also don't have to charge sales taxes to their users in most states in the US. In addition, Best Buy has seen product categories such as music CDs and movie DVDs decline in sales as consumers switch over to downloading music and movies. Best Buy has admitted that sales in its television, gaming and digital imaging product divisions have also declined. However, the company's sales were up in smartphones, tablets and eReaders.