Bad News For Best Buy: Profits Plunge 90%
Best Buy stores in the U.S. open longer than 14 months - which includes the one in Danvers - saw business drop 1.6 percent in the most recent quarter.
Best Buy is not having a good year, a good week or a good day.
The nation's largest consumer electronics retailer, Best Buy Co. withdrew its full-year earnings guidance on Tuesday after reporting a 90-percent drop in net income during the second quarter, dragged down by restructuring and weak sales.
Best Buy has a store in Danvers at the Liberty Tree Mall.
The dismal earnings report comes a day after Best Buy named Hubert Joly, former CEO of the Carlson travel company, as its new CEO and president. It was expected that Best Buy would pick someone with retail experience, and Wall Street didn't respond well, reported AP.
Already battered by news Monday of an uncertain buyout effort and the naming of a new chief executive, the electronics retailer's stock opened down about 10 percent on Tuesday after it reported weak results overall, though the shares recovered somewhat by midday, reported the Wall Street Journal online.
Revenue dropped and the gross margin contracted sharply because of increased sales of low-margin products such as smart phones, discounts on computers, and the its efforts to lower prices to better compete with online rivals, reported Reuters.
Some say Best Buy is even losing out to the local mom and pop stores.
Overall, 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, reported BusinessWeek.
Revenue at stores open at least 14 months - which includes the Danvers store - 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, reported BusinessWeek.
In This article
-
Best Buy
230 Independence Way, Danvers, MA -
Liberty Tree Mall
100 Independence Way, Danvers, MA
Jimmy W
4:14 pm on Thursday, August 23, 2012
I hate best buy.
Their employees are the most useless people on the face of the earth. They know nothing about the products and keep pushing their useless extended warranties. Customer service is nonexistant....ever TRY to return something or expect them honor a warranty? Wow.
Their prices are higher than almost every other retailer (brick and mortar or online). I compare products at their store and buy my electronics on amazon....which, even with overnight shipping, is much cheaper. I got an HDMI cable on amazon for $4. Best buy was asking over $30 for the exact same cord. I bought pioneer speakers for $50 at best buy...when I got home I found the exact same speakers for $29. Needless to say the bb speakers were promptly returned.
They think they are the only game in town now that circuit city is gone...and are jobbing their customers as a result. If you need something immediately go next door to Target or down the street to Walmart. If you can wait a day look online.
It's no surprise they are struggling...their shoddy business practices are finally catching up with them.
Edgar Allan Bro
5:42 pm on Thursday, August 23, 2012
Best Buy employees make no more than $10 an hour, so they have little incentive to devote their time to job knowledge to satisfy angry customers like you. Secondly, they're only actual job is to make a sale, which, includes packaging the product with a "useless extended warranties". Whether they have intimate knowledge of Best Buy's product line is irrelevant.
Buying Pioneer speakers at Best Buy before checking prices online is entirely your fault. Online retailers, like New Egg, will ALWAYS be cheaper than a store. Why's that you ask? Well Jim, that's because an online retailer's storefront is a website, which, is significantly cheaper to run than an actual store. Hence, they can sell their products for less.
I'm in the market for an LED TV, and I plan on buying it online, and not from www.bestbuy.com. Given Best Buy is reporting huge losses, I'm certain most folks share my sentiment.
It's just the way the industry is changing. Nonperishable, mass produced goods, no longer need a store front.
Jimmy W.
5:57 pm on Thursday, August 23, 2012
We have all had $10 an hour jobs, and many people would kill for one in this economy, so I have no sympathy for them. I have worked a low level sales job, but still was expected to know a reasonable amount about the product. Don't get me wrong, this is not the employees fault. Best Buy should do a much better job training these "salesmen" and ESPECIALLY the "customer service reps."
I am fully aware the speakers were my fault, but was appalled at the price difference. And, judging by your penultimate paragraph, we are on the same page. You aren't buying your next tv at best buy either.
And, for the record, peddeling useless warranties is annoying in any store. I don't care WHY they do it. I just know it is obnoxious and one of the reasons I will take my business elsewhere.
Pat
4:30 pm on Thursday, August 23, 2012
Their prices are too high. I can usually find what i want elsewhere for cheaper
Thomas Elliott
8:45 am on Friday, August 24, 2012
I CAN'T TELL YOU HOW MANY TIMES I HAVE LEFT THE ITEMS I WAS ABOUT TO PURCHASE FROM BEST BUY AT THE END OF THE LONG CHECK OUT LINE. THIS COMPANY NEEDS TO FIGURE OUT HOW TO TAKE THE MONEY FOR WHAT THEY ARE SELLING IN A REASONABLE AMOUNT OF TIME. I DON'T BOTHER TO SHOP THERE ANY LONGER.