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Best Buy suspends profit forecast as earnings decline | Best Buy suspends profit forecast as earnings decline |
(about 1 hour later) | |
Struggling US electronics chain Best Buy has suspended its profit guidance for the year after a dramatic fall in earnings. | Struggling US electronics chain Best Buy has suspended its profit guidance for the year after a dramatic fall in earnings. |
Net profits plunged to just $12m (£7.6m) on revenues of $10.6bn in the second quarter. Profits were $150m in the same period a year earlier. | |
Same-store sales also fell, the eighth decline in the past nine quarters. | |
Best Buy, which owns Carphone Warehouse, also suspended share buybacks. | Best Buy, which owns Carphone Warehouse, also suspended share buybacks. |
Best Buy's shares, which have lost almost 70% since their peak of $56.66 in May 2006, fell further after the results. | |
The firm is struggling to compete with online rivals, and blamed lower expectations for sales industry-wide as well as uncertainty about the success of key product launches in the second half of the year for withdrawing its profit forecast. | The firm is struggling to compete with online rivals, and blamed lower expectations for sales industry-wide as well as uncertainty about the success of key product launches in the second half of the year for withdrawing its profit forecast. |
Sales at stores open at least 14 months fell 3.2% in the three months to 4 August, including a 1.6% drop in the US and an 8.2% fall in international sales. | Sales at stores open at least 14 months fell 3.2% in the three months to 4 August, including a 1.6% drop in the US and an 8.2% fall in international sales. |
The firm said on Monday that talks with the firm's founder, Richard Schulze, over taking the company private had broken down. | The firm said on Monday that talks with the firm's founder, Richard Schulze, over taking the company private had broken down. |
Best Buy said that Mr Schulze had rejected an offer to conduct due diligence on the deal. | Best Buy said that Mr Schulze had rejected an offer to conduct due diligence on the deal. |
Mr Schulze, who owns just over a fifth of Best Buy, had wanted to buy the rest of the chain for between $24 and $26 a share. | Mr Schulze, who owns just over a fifth of Best Buy, had wanted to buy the rest of the chain for between $24 and $26 a share. |
He said he was "shocked" and "disappointed" that discussions over a possible buyout had broken up. | He said he was "shocked" and "disappointed" that discussions over a possible buyout had broken up. |
'Expensive showroom' | |
Best Buy has been struggling to compete with online rivals such as Amazon. | |
It said in June that one of its priorities was to stop its large stores simply becoming a showroom, where shoppers browse electronic products, but then buy them cheaper online. | |
Best Buy has seen annual declines in revenue at stores open at least a year for two of the last three years. | |
In March, it announced a major restructuring that included closing 50 stores, cutting 400 corporate jobs and trimming $800m in costs. |