US electronics chain Best Buy cut its fiscal-year profit outlook today, citing lower expectations for industrywide sales and uncertainty about key product introductions, and the company suspended its share buybacks for the year.
Best Buy also reported quarterly results below Wall Street expectations, highlighting the challenges newly named chief executive Hubert Joly faces in turning around the world's largest consumer electronics chain. It shares fell more than 10 per cent.
The company reported its eighth decline in same-store sales in the last nine quarters and said it did not expect to further update its earnings outlook for the year.
A weak product cycle and a tough global economy have hurt the consumer electronics industry in general. Best Buy has also struggled to fend off online and discount rivals as well as iPhone and iPad maker Apple Inc as it has been slow to adapt to the changing retail landscape.
Critics have complained that Best Buy has become a showroom for Amazon.com and other online retailers, with shoppers going to its stores to check out electronics like high-definition televisions and then buying them elsewhere for less.
Ending the practice of showrooming is a top priority, Best Buy had said in June.
The company has also said it is working to improve its online business and wants to reduce retail square footage further than the plan, announced in March, to close 50 of its 1,100 large US stores. Many investors were looking for even deeper cuts to turn around the chain.
Sales at stores open at least 14 months fell 3.2 per cent in the second quarter ended on August 4th, including a 1.6 per cent decline at the US unit and an 8.2 per cent drop internationally.
Net income fell to $12 million, or 4 cents a share, from $150 million, or 39 cents a share, a year earlier.
Excluding previously announced restructuring charges, earnings were 20 cents a share. Analysts on average were expecting 31 cents, according to Thomson Reuters I/B/E/S.
Sales fell 3 per cent to $10.55 billion, while analysts had forecast $10.63 billion.
Shares of Best Buy fell 10.2 per cent to $16.31 in premarket trading.
Reuters