For the three-month period ended on November 3, Best Buy posted a loss of $10 million, or 3 cents per share, missing analysts’ already-lowered-expectations for the quarter by 9 cents. A 4.3 percent decrease in same-store sales over the quarter contributed heavily to Best Buy’s poor results, giving proof to Joly’s claim that the company must boost its online sales. The results also suggests that the company’s brick-and-mortar stores are increasingly being used for showrooming rather than actual purchasing. Same-store sales fell for the ninth time in ten quarters.
The company’s third-quarter results illustrate that its problems have grown more severe since last year; In the year-ago-quarter, Best Buy reported earnings of $156 million, or 43 cents a share.
Following the release of the company’s earnings statement before the market opened on Tuesday, shares fell 8.2 percent, and the stock closed down 13 percent, at $11.97.
A = A-Level Management Runs the Company:
While the results were worse-than-analysts expected, there were no problem areas in the earnings report that came without warning. Joly was hired by the Best Buy’s board at the beginning of September to strengthen its operational and financial performance. At the company’s investors conference in New York last week, Joly unveiled his turnaround strategy Renew Blue, a plan designed to cut costs, combat showrooming, drive higher returns on assets, and rejuvenate the customer experience.
At the meeting, he highlighted both the company’s strengths and weaknesses. In his estimation, Best Buy’s primary asset is its “highly skilled and engaged workforce” known as the Geek Squad. “This is a very strong platform on which to build,” Joly said. He did note, however, that this strength must be focused into the same brand recognition enjoyed by Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL). The company’s new Chief Financial Officer Sharon McCollam, hired to help implement the company’s restructuring plan, believes Best Buy must provide a level of product expertise “similar to that of an Apple store but for a much more vast assortment of products.”
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