The stock price is down about 5% in pre-market trading after the consumer electronics and home entertainment retailer unveiled results that CEO Hubert Joly says were “clearly unsatisfactory.” Best Buy reports a net loss of $10M for the quarter that ended on November 3, down from a $156M profit in the period last year, on revenues of $10.75B, -3.5%. The revenue figure is just a hair ahead of the $10.73B that analysts expected. But the 4 cent net loss per share for continuing operations contrasts with the Street’s expectation for a 12 cent profit. Even without its previously announced restructuring charges — mostly for store closures — EPS would just be 3 cents a share. Best Buy says that sales at domestic stores open at least a year fell 4% with declines in notebook computers, gaming consoles, digital imaging, and television sets. The company believes that notebook and tablet sales were hurt as consumers waited for what it calls “major product launches” including Microsoft’s Windows 8 operating system. The slide at the bricks-and-mortar stores outweighed a 10% gain in online sales to $431M. Mobile phones, appliances, and tablets and eReaders were especially popular with online shoppers. All together, revenues for the domestic store unit fell 4.7% to $7.67B as operating income dropped 94% to $16M.
Meanwhile sales at international stores open at least a year fell 5.2%, as the operation generated revenues of $3.1B, down less than 1%, with an operating loss of $4M, down from last year’s $132M profit. With the lousy results, Best Buy lowered its financial guidance for the current fiscal year that ends in early January: It now projects as much as $1.05B in free cash flow, down from the maximum $1.5B it anticipated in August. Last week Best Buy told analysts that it plans to cut costs and re-invigorate sales by improving training for its sales staff and upgrading its website. “The results we are reporting today only strengthen our sense of urgency and purpose,” Joly says.