It seems like America’s financial problems are set to continue with Best Buy reporting major price increases, declining sales and an economic downturn for the rest of the year. Just a few years ago Best Buy stores were filled with buzzing shoppers huddled around displays carrying the latest gadgets from the likes of Microsoft and Apple.
Every aisle was busy, video game counters were filled with gaming enthusiasts, and employees were racing to help out customers. From flat-screen TVs to the latest mobile phones, there were lines at the checkout counter. However, in recent years, it has all gone wrong for the Biggest American retailers who are now facing a nightmare scenario.
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High inflation has forced shoppers to cut spending on not just non-essential items but also some of the necessities. One of the great American Success stories “Best Buy” is caught up in this retail gloom which will hurt American consumers further.
Telsey Advisory Group expects Best Buy sales to drop as much as 11 percent for the current quarter. The falling profits are backed up by the company’s own figures showing a 28% decline from last year. The drop in sales is not a recent phenomenon either. As this will be the sixth consecutive quarter where sales have fallen at Best Buy.
These trends are particularly worrying because personal electronics were a hot seller not so long ago. Any update from Microsoft, every new gadget launched by Apple resulted in massive lines of shoppers waiting to get the newest item on the market. With more innovative products on the market, Americans rushed to upgrade their devices. But right now, Americans are thinking of consolidation.
They are going for fixes rather than upgrades and for a business like Best-Buy that relies on selling the newest gadgets, this spells disaster. The downwards sales pattern is reflected in sales forecasts from every retailer in the country. Home Depot, Walmart, and Target are all in the same boat and are sharing disappointing outlooks for the year.
As for Best-Buy, the company is scrambling for answers.
Shares of best buy are down nearly 14% so far this year, a considerable drop in the current economic climate. The company is trailing many of the S&P 500 companies during this slide. Pushed by the circumstances, Best Buy has decided to end its popular rewards program and made it exclusive to only those who have a store credit card.
Despite all the clamorings about strong employment numbers, Best Buy has cut down its labor force. During the last two years, they have reduced overall numbers by 20%. So more than 25,000 people have been laid off and those numbers are still increasing. In a restructuring effort, the company also plans to shut down 30 large format stores.
The truth is that inflation-induced anxiety has taken over America. Everyone is planning to save up which puts the country’s economy in a desperate spot. Despite continuous claims of improvement from the officials, no one is entirely sure how much longer they have to continue on this pattern. America’s best-known retailers are reporting a loss of earnings, the shoppers are contending with stubbornly high inflation, and all forecasts point to a grim conclusion: Conditions are about to get much, much worse.
Article and video cross-posted from Epic Economist.
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