Best Buy Co. Inc. reported a weaker-than-expected profit and its ninth same-store sales decline in 10 quarters, highlighting the challenges its new chief executive officer faces in trying to turn around the world’s largest consumer electronics chain.
The news on Tuesday came just days before the unofficial start of the holiday season and amid a wide organizational restructuring under new CEO Hubert Joly and a looming buyout proposal by founder Richard Schulze.
“The results we are reporting today only strengthen our sense of urgency and purpose,” said Mr. Joly, who took the helm of Best Buy in September.
The company is a victim of a weak product cycle in consumer electronics, aggressive competition from online and discount rivals and its own failure to adapt to a changing retail environment.
Critics say Best Buy stores are hurting because they have become showrooms for Amazon.com Inc. and other online retailers as shoppers check out electronics like high-definition TVs and then buy them elsewhere for less.
Last month, Best Buy had warned that earnings and same-store sales would show declines for its third quarter, which ended on Nov. 3.
Best Buy, which also faces cutthroat competition from the likes of Wal-Mart Stores Inc. and Apple Inc., said its third-quarter net loss was $13-million (U.S.), or 4 cents a share, compared with year-earlier net earnings of $173-million, or 47 cents a share.
Excluding restructuring charges, the company earned 3 cents a share, far below the analysts’ average estimate of 12 cents, according to Thomson Reuters I/B/E/S.
Sales fell to $10.75-billion from $11.15-billion.
Sales at stores open at least 14 months fell 4.3 per cent, including a 4 per cent decline at the company’s U.S. unit.
Best Buy’s domestic business suffered from higher selling, general and administrative costs, falling sales and customers’ holding back on some purchases in anticipation of major product launches.
While demand was strong for mobile phones, appliances, tablet computers and e-readers, there were few takers for notebook computers, gaming products and televisions.
Same-store sales fell 5.2 per cent at the company’s international unit, hurt by weak sales in Canada and China.