Best Buy hit by holiday sales slump

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Best Buy reported disappointing holiday sales Thursday, sending shares plunging.

"We were surprised by the market decline," said CEO Hubert Joly, during a teleconference with analysts. "Everybody expected it to increase by 2 or 3%, but it declined by 2%."

The electronics retailer also blamed aggressive sales from competitors, "supply constraints for key products" and fewer customers during the key week leading up to Christmas. Joly identified those key products as tablets and phones.

Disappointing cell phone sales contributed to the 0.8% decline in same-store sales during the 2013 holiday season.

"When we entered the holiday season, we said that price competitiveness was table stakes and an intensely promotional holiday season is what unfolded," Joly said in a statement. He said that forced the retailer to also get more competitive with its prices, which will take a bite out of fourth quarter profits.

Best Buy (BBY) shares tumbled nearly 29% Thursday.

Related: JCPenney cuts 2,000 jobs, closing 33 stores

One bright spot: Online sales. Those increased by more than 20%, but that represents only a fraction of the company's sales.

Going forward, Joly said the company would "control our costs and reach levels of frugality and cost efficiency" and also "grow our online channel at an accelerated pace."

He also said that his "level of confidence in the ability to drive performance in the business is intact."

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