MINNEAPOLIS – Electronics retailer Best Buy Co. returned to a profit in the third quarter as the busy holiday season revs up. But the company says it expects a tough competitive environment during the holiday season.
Its shares fell 6 percent in premarket trading.
Best Buy has been cutting costs, adding employee training and matching online prices to get customers into stores as it faces competition from discounters and online retailers. But this holiday season Is expected to be particularly tough for retailers since its six days shorter than last year and stores are opening up earlier than ever during the Thanksgiving holiday shopping period. Best Buy will open at 6 p.m. on Thanksgiving Day this year, compared with a midnight Friday opening last year.
“In light of our competitors’ decisions to open early for Black Friday, we too are opening our stores at 6 p.m. on Thanksgiving Day and not closing them until late evening on Black Friday,” said Chief Financial Officer Sharon McCollam. “This requires increased promotional offers and an incremental investment in store payroll. But again, it’s table stakes.”
The increased markdowns and store hours may weigh on fourth-quarter gross margin, the percentage of each dollar in revenue a company actually keeps, McCollam said. But that will be offset somewhat by cost cutting efforts.