Best Buy shares continue slide on dimmer outlook
NEW YORK (AP) — Shares of Best Buy Co. continued to slide Thursday, a day after the struggling electronics retailer slashed its guidance for the year and announced the departure of two key executives as part of a turnaround push.
THE SPARK: The Minneapolis-based company said Wednesday that two executives, including its U.S. president, would leave as it eliminates the most senior level of its U.S. operations to create "a leaner structure intended to improve the company's agility." The company also offered a dim view of its upcoming third-quarter financial results, predicting net income would be "significantly below" last year and a key revenue figure would decline.
THE BIG PICTURE: The announcements come as CEO Hubert Joly, who was hired in August, pushes to improve the company's fortunes. Joly came onboard after former CEO Brian Dunn left following an investigation into inappropriate behavior with a female colleague.
The company is fighting to reverse a two-year decline in its business due to changing consumer habits, as well as a weak global economy. In particular, the retailer's stores are becoming less profitable as customers increasingly use them to browse for electronics, then buy products cheaper online or elsewhere.
Meanwhile shoppers are increasingly opting for gadgets with less profit for merchants, such as cellphones and tablets, rather than big-ticket TVs and computers.
Citing the latest announcement, Raymond James analyst Dan Weaver lowered his fiscal third-quarter earnings target to 8 cents per share from 32 cents per share. He kept his "market perform" rating, because of the company's inexpensive stock price and the slim probability of a buyout.
Janney analyst David Strasser lowered his third-quarter estimate to 14 cents per share from 39 cents.
SHARE ACTION: Best Buy shares fell $1.56, or 9.2 percent, $15.36 in midday trading.