Best Buy’s second-quarter net income drops
Best Buy Co. reported weaker-than-expected quarterly results and cut its profit outlook for the year as shoppers held off on buying televisions and other nonessential items in the anemic U.S. economy.
The Tuesday announcement highlighted the fragility of recovery in the world’s largest economy.
Best Buy said that profit in the year will be as much as $3.45 a share, excluding share repurchases, down from its earlier forecast of as much as $3.55 a share. It still expects revenue of $51 billion to $52.5 billion.
The retailer has seen sales slow in markets such as Europe and Canada as well.
“Looking at the big picture worldwide, we’re still facing an uncertain macro environment with volatile consumer shopping behavior,” Chief Executive Brian Dunn said.
More than a quarter of Americans expect to spend less during the holidays this year, a survey showed, in an early sign that retailers will have to try harder to win shoppers this holiday season.
Best Buy is also a victim of a lackluster product cycle and cut-throat competition from chains such as Wal-Mart Stores Inc. and Internet retailers like Amazon.com Inc.
Amazon’s prices on televisions remain 12% to 14% below Best Buy’s, Deutsche Bank analyst Mike Baker said.
The retailer, seen as a bellwether in consumer electronics, said its second-quarter sales were essentially flat at $11.3 billion. Analysts expected about $11.5 billion.
Sales at stores open at least for 14 months fell 2.8%, their fifth straight quarterly decline.
Second-quarter net profit fell to $177 million, or 47 cents a share, from $254 million, or 60 cents, a year earlier. Analysts on average were expecting 53 cents a share, according to Thomson Reuters.
Best Buy shares fell $1.61, or 6.5%, to $23.35 after earlier falling to a 52-week low of $22.74. The stock traded as high as $45.63 in late November.
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