Best Buy Co. Inc. (NYSE:BBY) lost $65,000 on sales of the iPhone 5 over the holiday period, according to a statement made by the company today. The losses stemmed from the electronics stores promise to match the prices offered by any competing retailer. Wal-Mart Stores Inc. (NYSE:WMT) provided the impetus for most of the losses.
The Apple Inc. (NASDQ:AAPL) iPhone 5 was a big seller over the holiday period, and Apple's staunch pricing meant that stores offering discounts on the product were instant winners with customers. At one stage during the holiday season. Wal-Mart Stores Inc. (NYSE:WMT) was selling the lowest spec iPhone 5 model for $127.
Best Buy Co. Inc. (NYSE:BBY) kept to its price matching guarantee, and lowered its prices to match its major competitor. Though the company did not say exactly how many iPhone 5s it sold at the lower prices, it did reveal that it lost a grand total of $65,000 due to the price cuts.
Best Buy Co. Inc. (NYSE:BBY) claims that although Wal-Mart lowered its prices to the amount advertised, it was offering only a very limited number of iPhone models to customers. That ensured the company did not loose much in total, but garnered a great deal of advertising buzz from its pricing.
Best Buy however, had stores that stocked the iPhone 5 filled to 98% capacity according to the statement from the company. That resulted in huge losses as more and more consumers sought cut price Apple Inc. (NASDAQ:AAPL) gifts. The company is hardly reeling from a $65,000 loss, but the gap between it and the profit it should have made from handset sales is probably significant.
Though it will not be forced to it is possible that the company will release more information about this loss when it announces its next quarterly earnings. That might give a clearer picture of the losses, and what exactly the company proposes to do in the future to stem them. Competition strategists at Wal-Mart Stores Inc. (NYSE:WMT) must be salivating over ways to make this strategy hurt more the next time.