Best Buy reported second quarter earnings Tuesday morning with net income down 91% to $12M, widely falling short of Wall Street estimates. Revenues were $10.55B, down 3% on the same period a year ago as bricks & mortar sales continue to decline. The news was met with a share price drop of 9% in pre-market trading for the struggling consumer electronics retailer. The company said it had reduced its annual earnings expectations, due to “lowered expectations for industry wide sales and the uncertainty associated with several key product launches expected in the second half” of the year. Best Buy also said it would not provide further forecasts for 2013, having just hired a new CEO who won’t take up his post until September. The company did allow that it expects to generate free cash flows of $1.25B to $1.5B for fiscal 2013.
On Monday, Best Buy announced the appointment of turnaround specialist Hubert Joly. Investors respnded with a 10% drop in the share price at yesterday’s close. Wedbush Securities analyst Michael Pachter wrote in a note on Monday, “We find Mr. Joly’s résumé unimpressive, and believe he lacks sufficient experience to engineer a turnaround at Best Buy,” according to DealBook. Joly, a Frenchman who was most recently at the head of travel and hospitality group Carlson, is lacking retail U.S. experience, Pachter contended. But Oppenheimer & Co analyst Brian Nagel told Bloomberg News … Read More »
2ND UPDATE, 5:53AM: Best Buy has officially announced the appointment of turnaround expert Hubert Joly as president and CEO, replacing interim CEO G. Mike Mikan. In a statement this morning, Best Buy board chairman, Hatim Tyabji, said: “Hubert’s range and depth of experience in transforming companies is exactly what the company needs at the moment, as is his energetic, imaginative and experienced leadership in executing strategies.” Joly will also join the company board.
UPDATE, 1:05AM: Amid the back-and-forth over Richard Schulze’s bid to acquire the struggling Best Buy, the company has found a new CEO in Frenchman Hubert Joly, The Wall Street Journal reports. Joly resigned as chief exec of global hospitality and travel company Carlson on Sunday. According to The Journal, Joly has been successful at turning around media and technology companies including a restructure of Vivendi’s videogame business. He is expected to take up his post in September. Best Buy will report earnings tomorrow and is expected to further outline its own turnaround plans at that time.
PREVIOUS: Last week, Best Buy founder Richard Schulze urged the company’s board to allow him to proceed with his effort to take the consumer electronics chain private at a valuation of about $8.8B. Yesterday, Best Buy said the board offered Schulze an opportunity to conduct due diligence and pursue his interest, but that Schulze declined to participate. Read More »