Best Buy announced Thursday morning that domestic same-store sales fell 0.9% over the holiday season, sending shares in the big-box retailer tumbling more than 25% in early trading. Same-store sales growth—or the change in revenue from existing stores—is a key metric for the retail industry because while new stores might grow revenue, the performance of existing stores is a predictor of what the company can achieve once no more stores can be built.
Investors had been optimistic about newly hired CEO Hubert Joly’s “Renew Blue” turnaround plan, which includes closing larger stores and opening smaller locations more focused on popular products like smart phones. Joly has also focused on turning its 1000-store base into distribution centers for its ramped-up online operation. Shares in Best Buy had increased 161 percent over the past year, as investors bought into the vision.
But with today’s earnings announcement, it appears that investors are at least starting to wonder about giving Best Buy the benefit of the doubt.