Best Buy Canada sales sputter as parent seeks turnaround
Sales are falling at Best Buy Canada, as its parent, Best Buy Co. (NYSE:BBY), grapples with a tough economic environment, a new CEO who has no retail experience and a stock that is languishing near nine-year lows.
Best Buy Canada told Business in Vancouver last year that it employs 19,944 staff including 4,042 in B.C. and that its sales totalled more than $5.6 billion in 2010 – enough to rank as B.C.’s second-largest private company.
It saw a second-quarter 2012 sales drop in percentage terms in the “high single-digits” compared with the same quarter a year ago, parent Best Buy Co. revealed August 21. That drop was in both Best Buy Canada’s Future Shop and Best Buy-branded stores and stemmed from sluggish laptop computer, digital imaging and home theatre sales.
Sales in Best Buy Co.’s international division, which also includes stores in China and Europe, fell a similar 8.2%.
Best Buy Co. withdrew its full-year earnings guidance August 21 after reporting a 90% drop in net income to US$12 million during the second quarter compared with $128 million in the same quarter in 2011, thanks to restructuring charges and weak sales. Revenue declined nearly 3% to $10.55 billion.
Earlier this week, Best Buy Co. unveiled new CEO Hubert Joly. Joly is a former CEO of the Carlson travel company and is a turnaround expert, but has no experience at a retail venture.
The company announced a 3.8% annual dividend, to be paid quarterly, but it was not enough to keep shares from slumping on August 22 to US$17.72, which is the lowest price since early 2003.