NEW YORK – The news just keeps getting worse at Best Buy.
To top off an already eventful several days for the nations largest consumer electronics retailer, Best Buy Co. withdrew its full-year earnings guidance Tuesday after reporting a 90 percent drop in net income during the second quarter, dragged down by restructuring charges and weak sales.
The poor report comes a day after Best Buy named turnaround expert Hubert Joly, former CEO of the Carlson travel company, as its new CEO and president. Wall Street didnt respond well, sending Best Buy shares down 10 percent.
And before that, the board and Richard Schulze over the weekend waged a public fight over the co-founder and former chairmans plan to take the company private.
Best Buy has been engulfed in mounting controversy since April when former CEO Brian Dunn resigned amid a company investigation into an improper relationship with a 29-year-old female employee. Schulze resigned as chairman a month later after the probe found that he knew about the relationship and failed to alert the board or human resources.
The series of bad news that has followed comes as Best Buy fights to reverse a decline in its business due to a weak global economy and consumers changing habits.
Best Buy earned $12 million, or 4 cents per share, in the quarter ended Aug. 4. That compares with $128 million, or 34 cents per share. Revenue declined nearly 3 percent to $10.55 billion. Adjusted earnings were 20 cents per share, missing the 31 cents per share on revenue of $10.65 billion analysts had expected. Revenue at stores open at least 14 months fell 3.2 percent for the entire business, including a 1.6 percent drop in its domestic business and an 8.2 percent decline in its international division. Analysts had expected a 2.6 percent decline for the total business.
Brian Sozzi, chief equities analyst for research firm NBG Productions, described the latest quarters results as ugly. He said that Best Buy management needs to turn around things quickly.
Every day, the (business) model is changing, and it goes against Best Buy, he said.