Citing weakness in China and Europe, Best Buy (NYSE:BBY) posted a sharp decline in second-quarter earnings and sales, leading the ailing retailer to suspend its fiscal 2013 earnings guidance and buyback plans.
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Shares of Best Buy fell nearly 10% to $16.30, a new 52-week low.
The consumer electronics giant, which hired French businessman Hubert Joly on Monday as CEO, said net earnings fell to $12 million, or 4 cents a share, compared with a year-earlier $150 million, or 39 cents.
Excluding one-time items, Best Buy earned 20 cents, below average analyst estimates of 31 cents in a Thomson Reuters poll.
The company said it would suspend its share repurchases for fiscal 2013 as it transitions Joly into his position as CEO. Joly will replace Mike Mikan, who was serving as interim CEO following the departure of Brian Dunn, who abruptly resigned earlier this year amid allegations that he had an affair with a female subordinate.
In a statement released on Monday, Best Buy said that it is hoping to use Joly’s long list of experience of turning around companies to help lead the struggling consumer electronic giant’s overhaul. The company has posted comparable sales declines in eight of the last nine quarters.
Revenue for the three months ended Aug. 4 was $10.56 billion, down from $11.35 billion a year ago, missing the Street’s view of $10.63 billion. Comparable-store sales – a key growth metric for retailers that measures sales at stores open longer than a year – fell 3.2%, and 1.6% in the U.S.
Best Buy said comparable-store improvement in tablets, mobile phones, appliances and e-readers helped offset declines in gaming, digital imaging and TVs. Online revenues grew by 14%.
However, the Richfield, Minn.-based company was also impacted by a slowdown in its international markets, which Best Buy said was impacted by lower revenue in China, Canada and increased competition in Europe. International comparable-store sales declined by 8.2%.
The embattled retail chain reduced its fiscal 2013 earnings guidance, citing lower expectations on industry-wide sales and the “uncertainty associated with several key product launches” set for the second half of this year.
Best Buy said that it does not plan to further provide or update earnings guidance this year but will continue to provide forward looking commentary on business trends. It continues to expect to achieve its domestic market-share goals for the fiscal year and generate free cash flow in the range of $1.25 billion to $1.5 billion.
Meanwhile, the company’s co-founder and former chairman, Richard Schulze, said Monday that he will move forward with pursuing a takeover of the company.