Best Buy takeover bid falls through, earnings show signs of hope
Richard Schulze, Best Buy Co.’s largest shareholder, missed his window this week to attempt a takeover of the electronics retailer.
But if its fourth quarter financials are any indication, the struggling company may not need him.
Best Buy, beleaguered by several quarters of slipping earnings, narrowed its loss to $409 million, or $1.21 a share, from a loss of $1.82 billion, or $5.17 a share during the same period a year earlier.
During the quarter, which ended Feb. 2, revenue was mostly flat at $16.7 billion.
Investors seemed cheered, pushing the stock up 1.4% to $16.64 a share in mid-day trading in New York. Best Buy stock has been on a downward slump for two years, losing a third of its value in the past year alone.
Same-store sales, which mitigate volatility by tracking locations open for at least 14 months, dipped 0.8%, an improvement on the 1.3% dive a year earlier. Much of the weakness derived from a 6.6% plunge in foreign Best Buy stores; domestically, comparable sales ticked up nearly a percent.
Internet revenue in the U.S. surged 11.2%, giving credence to Best Buy’s new online price-matching program, in which the retailer guarantees the same or lower prices as local and online rivals such as Amazon.com.
The strategy is meant to dissuade “showrooming” shoppers who try out products in physical stores and then buy discounted versions online.
New Chief Executive Hubert Joly is implementing a refresh at Best Buy that most recently resulted in 400 employee cuts at the company’s Richfield, Minn., headquarters. The effort, part of a larger “Renew Blue” transformation, was designed to save $150 million.
For now, the makeover initiative will have to go ahead without Schulze, Best Buy’s founder and former chairman.
Thursday night’s deadline for Schulze to present Best Buy with an acquisition proposal – plans he has suggested for months – passed without incident.
With takeover talks ended, Best Buy said in a statement that it “will continue to focus on its transformation for the benefit of all its stakeholders.”
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