The Best Buy Company, Inc. (BBY), known simply as Best Buy, was recently in the news after reports of low holiday season sales triggered a 30% drop in its stock price – the largest single-day fall recorded for the stock in a decade.
Best Buy’s poor performance in the all-important holiday season prompted Goldman Sachs to downgrade its rating for the company from Buy to Neutral. Investors took that as another reason to punish the stock, and it sank another 9%.
The TriggerThe company reported a 0.8% decline in sales from stores open for at least one year for the nine-week period ending January 9, 2014 (the period covers the holiday season). Although the drop in revenues was lower than the drop recorded in the same period last year, investors were left deeply disappointed – especially as the initial successes of Best Buy’s ongoing turnaround had set expectations high.
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