Best Buy profit plunge sinks stock
Best Buy Co. Inc. (NYSE:BBY), the U.S. parent of B.C.'s second-largest privately owned company, announced November 20 that operating income dove 97% to US$12 million in the third quarter, prompting its stock to collapse to a new decade-plus low.
Sales fell to US$10.75 billion from US$11.15 billion.
The electronics retailer reported that its international segment, including Burnaby-based Best Buy Canada, saw an adjusted operating loss of US$2 million for the three months ended November 3.
"The decline was due to Canada, Europe and China, driven by lower revenue in Canada and China and lower gross profit in Europe," the company said.
Best Buy Canada had seemed to be on a roll, opening new Best Buy-branded stores in Calgary in October and in Vancouver earlier this month.
The company also opened a new Futureshop.ca-branded store in North Vancouver on November 3.
Best Buy's Canadian division now consists of 79 Best Buy-branded stores, 47 stores branded Best Buy Mobile and 149 Future Shop stores, spokeswoman Danielle Jang told Business in Vancouver.
Best Buy also lowered its full-year guidance, saying that it expects to generate free cash flow in the range of US$850 million to US$1.05 billion. That compares with the US$1.25 billion to US$1.5 billion range it reported in August.
Best Buy warned investors last month that third-quarter profit would drop by at least 10% so the company's November 20 earnings were an unpleasant surprise for analysts.
Best Buy stock closed at US$11.96, down more than 13%.