Best Buy Posts $10 Million Third-Quarter Loss20 Nov, 2012 By: Erik Gruenwedel
Best Buy Co. Nov. 20 reported a $10 million third-quarter (ended Nov. 4) loss, compared with $154 million in net income during the previous-year period.
Best Buy is one of the largest retailers of televisions, packaged media and connected devices, including Blu-ray Disc players.
The Minneapolis, Minn.-based consumer electronics chain cited ongoing declines in sales and related restructuring charges for the loss. Total revenue dropped 5% to $7.6 billion from $8 billion as increasing numbers of consumers opted to purchase CE devices online and elsewhere after perusing Best Buy stores — a trend dubbed “showrooming” by analysts and Best Buy executives.
Notable sales declines occurred in notebook computers, TVs, digital cameras and video games.
Excluding costs related to store closures, domestic operating income declined to $16 million from $249 million last year, due to higher sales and general administrative costs, lower revenue and smaller gross profit. Same-store sales declined 4.3%.
“In line with trends experienced over the last three years, [our] third-quarter financial performance was clearly unsatisfactory,” CEO Hubert Joly said in a statement. “On Nov. 13, we shared our candid assessment of Best Buy’s situation and unveiled [a new] set of priorities to begin reinvigorating the company’s performance and rejuvenating Best Buy. The results we are reporting today only strengthen our sense of urgency and purpose.”
Indeed, Best Buy in the Nov. 13 call unveiled “Renew Blue,” a forward strategy aimed at streamlining store-based decision-making processes, empowering store personnel and matching competitors’ online pricing through the holiday retail season.
Mike Vitelli, EVP of U.S. operations, said allowing store personnel (“Blue Shirts”) the ability to match prices with online competitors during the winter holidays should boost fourth-quarter sales.
“Our Blue Shirts are very positive about this and very empowered about this by giving them the ability to match prices in areas, where they have seen, and we've been showing that we've been competitive and relatively close, particularly in the hardware category,” Vitelli said in a call with analysts. “We feel really good about the prices that we have in place, along our key product categories. And as always, during the holiday selling season, especially during Black Friday, we feel very comfortable about the competitiveness of our prices, in general.”