Best Buy's profits down 90 percent

Categories: Best Buy
best buy joly.jpg
The bleak earnings report comes just a day after Hubert Joly was named CEO.
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-- Best Buy announces $1.7 billion loss, plans to close 50 stores and cut 400 jobs


Best Buy has been taking a PR beating all year long, and the damage is now starting to manifest itself in dollars and cents.

A new earnings report shows that the company's profits fell a whopping 90 percent during the second quarter this year, from $130 million in 2011 to just $12 million this year. The news prompted Best Buy to announce it won't forecast profit for the second half of this fiscal year and will suspend its share buy-back program.

The bleak earnings report comes just a day after Hubert Joly was named Best Buy's new CEO. Joly comes to Best Buy after a successful tenure as CEO of Carlson, a Twin Cities-based hospitality and travel company.

But the appointment of Joly hasn't reassured investors about the long-term health of Best Buy. The company's board remains in talks with founder and former chairman Richard Schulze about a possible shareholder buyout that would allow Schulze to take the company private, though reports over the weekend indicated the negotiations have reached an impasse.

"The new strategic plan that [Best Buy's board is] trying to execute does not seem to be gaining material traction," John Tomlinson, an analyst at ITG Investment Research in New York, told Bloomberg. "The struggle between the former chairman and current management isn't something that is going to go away any time soon."

After he was named the next CEO, Joly told reporters he enjoys challenges. The one he faces in trying to turn around Best Buy is growing more daunting by the day, as the company's stock fell nearly 10 percent after news of the earnings report circulated this morning. For the year, Best Buy's stock is down 22 percent, not counting today's dip.

It's been a sudden and steep fall for Minnesota's third-largest company. For the sake of the Twin Cities' economy, let's hope that either Joly or Schulze finds a way to dig Best Buy out of the hole before it's too late.


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10 comments
BBCMN
BBCMN

Good i hope they just go out of business, disappear.The employees and the executive team have no clue as to what to do or what's going on. People don't shop there anymore it's over, on a side note one of the chief clowns who helped make this possible i.e. the Brain Dunn fiasco will be losing his job soon enough.BBY took the word of a sociopath without checking his past HR and discipline problems.Good Riddance !!!

Clay Miller
Clay Miller

looks like people finally figured it out

CinBlueland
CinBlueland topcommenter

Sad, if BB goes away where will musicians, art school students, and social justice majors find jobs?  It's obvious nobody working the floor there knows anything about the products they sell and well there's only so many coffee shops and pizza delivery jobs.

kcmpls
kcmpls

@MAPE2012 Boo hoo friends and family of members losing their jobs. Boo hoo losing important tax base that pays members' salaries.

JeremyWieland
JeremyWieland

@eric_pusey @panopticon13 More likely about uncertainty over ownership and various accounting charges. Too much cash to not see an upside

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