Best Buy reports third-quarter loss, slumping sales
Best Buy Co. reported a significant third-quarter loss Tuesday as the electronics giant struggles with slumping sales and heavy restructuring costs.
The Richfield, Minn.-based retailer has been fighting to turn around a steady erosion in its business as Web rivals such as Amazon.com lure away its shoppers and turn its stores into showrooms where customers can test products before buying them online at a lower price.
Best Buy has also been contending with customers who have been shifting away from DVDs, CDs and pricier gadgets such as video game consoles as smartphones and tablet computers gain ground.
For the three months ended Nov. 3, Best Buy reported a loss of $10 million, or 3 cents a share, compared with a profit of $156 million, or 42 cents per share, in the same period a year ago. Sales fell 3.5% to $10.75 billion, the company said.
Chief Executive Hubert Joly, who came aboard in August with significant turnaround expertise, described the results as “in line with trends experienced over the last three years.”
“Best Buy’s third-quarter financial performance was clearly unsatisfactory,” Joly said in a statement. “The results we are reporting today only strengthen our sense of urgency and purpose.”
At an analyst meeting last week, Joly laid out a plan to close and reformat stores as well as tinker with the number of big-box locations and smaller mobile stores in the company’s roster. He also said he plans to bolster the quality of customer service and slash costs.
Best Buy needs whatever help it can get, analysts say.
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This year alone the retailer has been rocked with a scandal involving former Chief Executive Brian Dunn, who resigned during a probe into his personal conduct in connection with his relationship with a female employee. The revelation eventually also forced out founder Richard Schulze, who later expressed interest in buying out the company.
Shares of Best Buy fell 12%, or $1.65, to $12.10 in midday trading Tuesday.
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