Best Buy hit as America reins in its retail spending

US retail sales grew at their slowest pace in five months in November, tempering expectations for a strong holiday shopping season.

Retail sales increased a weaker-than-expected 0.2 per cent after gaining 0.6 per cent in October, a commerce department report showed yesterday.

Some economists warned that some of the strength in US spending has come from households saving less, a trend that might not last.

The gloomy figures were compounded by Best Buy’s results, which missed Wall Street estimates as bigger holiday discounts ate into the electronics chain’s profits.

The news pushed Best Buy’s shares down more than 15 per cent yesterday and raised the question of whether price was the primary weapon to drive sales, a worrisome longer-term scenario for Best Buy and other brick-and-mortar chains with massive investments in infrastructure and major efforts to increase the service side of the business.

Net earnings fell to $154m (£99.5m) in the quarter to 26 November, from $217m a year earlier.

Total sales rose to about $12.10bn, missing the analysts’ average estimate of $12.14bn.