updated 10:55 am EST, Tue November 20, 2012
Domestic revenues drop 4.7 percent compared to last year
As previously warned, Best Buy suffered a continuing operations loss of $13 million for the quarter, according to its latest results. This is down from the $173 million in profit from the same period last year, with revenue also declining year-on-year to $10.75 billion from $11.15 billion, and the domestic segment operating income dropping from $249 million to just $50 million for the same period.
Domestic revenues have also declined 4.7 percent to $7.7 billion from last years figures, partly from a comparable store sales decline of 4 percent, as well as the impact of store closures. Its online business has grown in revenue by 10 percent to $431 million, which although an improvement, is not enough to counter the decline in the brick-and-mortar business. This could also be a sign to management that consumers are continuing to liken the Best Buy stores to a product showroom before buying the same devices online, something that the company is still struggling to combat.
International business has also declined, with the blame set squarely at lower revenues in Canada and China, and a lower gross profit in Europe. Revenues internationally declined one percent, and while store sales declined overall by 5.2 percent, sales in Europe increased while it declined elsewhere.
Best Buy is currently undertaking a plan to save around $800 million by 2015, which will see the closure of 50 "big box" stores during the 2013 financial year, changes in store stock to reflect the shift from DVD and CD sales to tablets and mobile phones, as well as a smaller range of large-screen televisions.
Ex-CEO and company founder Richard Schulze is still reviewing the financial data in preparation of a buyout. Negotiating with at least four private equity firms, Schulze may end up paying around $11 billion for the company, in the hope that he and his management team can improve the electronic retail giant's fortunes.