Earnings Preview: Best Buy 2Q seen weaker
NEW YORK (AP) — Best Buy Co. reports its second-quarter results before the market opens Tuesday, and investors and analysts will be looking for any updates about what plans the electronics chain has to improve its business as well as any news about a recent takeover offer from its former chairman.
WHAT TO WATCH FOR: The Minneapolis company has been struggling to stay relevant as more people buy electronics online. Over the past year, it has announced a major restructuring plan and fired CEO Brian Dunn amid allegations that he had an inappropriate relationship with a female employee.
Best Buy is trying to avoid the fate of its rival Circuit City, which went bankrupt in 2009, partly because of changing shopper habits.
Best Buy has been shrinking store size and focusing on its more-profitable products such as mobile phones. It's also trying to combat the so-called "showrooming" of its stores — when people browse at Best Buy but purchase electronics goods elsewhere, especially online.
In March, it announced a major restructuring that includes closing 50 stores, cutting 400 corporate jobs and trimming $800 million in costs.
CEO Brian Dunn left in April amid an investigation that he had an improper relationship with a female employee. Since that departure, interim CEO Mike Mikan has made strong statements about how he plans to restructure the company, focusing on services and revamping stores. He's in the running for the permanent CEO position.
In early July, Best Buy said it would lay off 600 staffers in its Geek Squad technical support division and 1,800 other store workers.
Earlier this month, Best Buy's founder and former chairman Richard Schulze, Best Buy's largest shareholder with 20 percent of shares, made a takeover offer for the chain, offering $24 to $26 per share. Best Buy is considering the offer, which values the company at $8.84 billion.
Schulze said Thursday that he is committed to his offer for the electronics retailer and has heard from a number of private equity firms prepared to make "significant commitments."
WHY IT MATTERS: Best Buy is the largest U.S. specialty electronics store and how it does financially can indicate how Americans are spending on discretionary goods, or more broadly, how they feel about the economy.
WHAT'S EXPECTED: Analysts expect earnings of 31 cents per share on revenue of $10.66 billion, according to FactSet.
LAST YEAR'S QUARTER: Best Buy reported net income of 37 cents per share on revenue of $11 billion.