Best Buy's holiday sales disappoint Best Buy reported disappointing holiday season sales as the US electronics retailer struggled to compete with heavy discounting from rivals, wiping out almost 30 per cent of its market value. Hubert Joly, chief executive, said holiday revenues were hit by "aggressive promotional activity in the retail industry" during the crucial shopping period that includes Black Friday - the day after Thanksgiving - and Christmas. For the nine weeks ending January 4, same-store sales - which includes stores open at least 14 months and online sales - declined 0.8 per cent, from a 1.7 per cent decline in the prior year period. Analysts had expected growth of 0.7 per cent for the holiday period, according to Retail Metrics. Domestic same-store sales fell 0.9 per cent, compared with flat results the year before. Mr Joly, who was hired in 2012 to revive the ailing retailer, said in November Best Buy would sacrifice profitability to match rivals" discounts. This pricing strategy came at a higher than expected cost, and the company now expects operating income to decline in the fourth quarter. Supply constraints for key products, a significant decline in shopper traffic leading up to Christmas and a "disappointing mobile phone market" also contributed to weaker sales, Mr Joly said. Despite a modest US economic recovery consumers are still keeping a tight hold of their purse-strings. At the same time "big box" stores are contending with online retailers which are increasingly becoming the preferred choice for shoppers. This lack of holiday follow-through is likely to re-stoke fears of permanent operating margin pressures to the business David Schick, Stifel Best Buy's results followed a string of disappointing announcements from department store Sears to discount chain Family Dollar, which issued fourth-quarter profit warnings as pressure to lower prices during the season put pressure on margins. GameStop stock plunged nearly 20 per cent on Tuesday following its holiday sales report that showed a decline in new video game software. In the UK, department store Debenhams has also warned of poor sales and profits as a result of discounting pressure over Christmas. The end-of-year nine-week shopping period is critical because it can account for up to 40 per cent of a US retailer's annual revenue. Best Buy shares dropped to a low of $25.78 in early Thursday trading before recouping some of the loss to be $27.48 by mid-morning. Mr Joly said the retailer - which has cut jobs and closed weak stores - will continue "to more quickly and more deeply lower our cost structure," pointing out the "sense of urgency around our transformation." In the domestic market, consumer electronics same store sales fell 6 per cent compared with the same period a year ago, while computing and mobile phones sales rose just 3.2 per cent. Those in the entertainment division dropped 6.6 per cent. "This lack of holiday follow-through is likely to re-stoke fears of permanent operating margin pressures to the business," said David Schick, at Stifel. "Our biggest concern stems from our belief the fourth quarter had to go well to continue the virtuous cycle of vendors reinvesting in the consumer electronics speciality model - the lacklustre sales, then, are perhaps a deterrent," he added. One bright spot was its online sales, which climbed 23.5 per cent, better than the 10 per cent uptick the year before. International sales edged up 0.1 per cent versus a 10.3 per cent drop the prior year. Total revenue for the period slipped 3 per cent to $11.45bn from $11.75bn. Domestic revenue declined to $9.75bn from $9.91bn. International revenue fell to $1.7bn from $1.85bn.