Thursday, October 25, 2012

Best Buy Co., Inc. (NYSE:BBY) issues profit warning for third quarter

Consumer confidence is yet to return in full swing in the U.S. and retailers are feeling the impact of the slowdown in spending.

Best Buy Co., Inc.(NYSE:BBY), which is the world's largest consumer electronics chain, said that it expected earnings and same-store sales to fall in the third quarter.

The top two executives heading its U.S. business are set to leave as the company is restructuring under new chief executive Hubert Joly.

Joly was brought in to rescue the company from shoppers who treat the stores as showrooms for cheaper online retailers.This does not translate into sales for the company.

Mike Vitelli, who has been heading the company's U.S. business operations for the past few years, is set to exit the company in early February with pay-off of $1.45 million. The executive vice-resident of the U.S. operations is also set to quit the company.

Best Buy has been taking numerous measures in order to cut costs and streamline its operations. In August, just after Joly took over at the helm the company's management decided to suspend profit forecast and share buybacks for the remainder of the year to allow its new chief to construct his own turnaround plan.

Analysts polled by Reuters on average expected earnings per share of 36 cents in the quarter. In the fiscal third quarter a year earlier it earned 47 cents per share on an adjusted basis.

Shares in Best Buy fell to $15.77 in after-market trades, from the closing price of $16.92 in New York.

On November 1, the company will be holding an investor day where Joly will be spelling out his plans for the future.

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