Consumer electronics retailer Best Buy Co., Inc. (BBY: Quote), which is engaged in a takeover battle with its founder and former Chairman Richard Schulze, Tuesday said profit in the second quarter plunged from last year, amid a 3 percent drop in revenue and some restructuring costs. Looking ahead, Best Buy said it does not intend to provide or update earnings guidance for fiscal 2013. The stock is plunging over 10 percent in pre-market activity.
Net earnings attributable to the company plunged to $12 million or $0.04 per share from $128 million or $0.34 per share in the prior year. Earnings from continuing operations totaled $0.39 per share last year.
Excluding restructuring charges, earnings from continuing operations amounted to $0.20 per share.
On average, 22 analysts polled by Thomson Reuters expected earnings of $0.31 per share for the quarter. Analysts' estimates typically exclude special items.
Revenue slid to $10.547 billion from $10.856 billion. Wall Street expected revenues of $10.63 billion for the quarter. Comparable store sales dropped 3.2 percent compared to a 3.8 percent decline last year.
Domestic revenue slipped 2.2 percent to $7.80 billion. Comparable store sales were down 1.6 percent, driven by declines in gaming, digital imaging and televisions as well as notebooks.
International revenue declined 4.7 percent to $2.74 billion. Comparable store sales decreased 8.2 percent, owing to lower growth in consumer spending in China and the continued impact from the expiration of government sponsored programs, which negatively impacted sales in Five Star.
The company, which earlier this week announced the appointment of Hubert Joly as CEO, has suspended its share repurchases for fiscal 2013, in view of the CEO transition.
Looking ahead, Best Buy said it does not intend to provide or update earnings guidance for fiscal 2013 as the new CEO starts in early September and the company now has reduced its annual earnings expectations.
According to the retailer, based on the normal seasonality of the business, majority of its annual earnings occur in the second half of the year. Citing reduced expectations for industry wide sales and the uncertainty associated with several key product launches expected in the second half of fiscal 2013, Best Buy lowered its annual earnings expectations.
The company had previously forecast adjusted earnings per share of $3.50 to $3.80 for fiscal 2013, including the impact of expected share repurchases and excluding fiscal 2013 restructuring costs. Including charges, earnings per share was expected in the range of $2.85 to $3.25.
The struggling retailer has been in an unenviable position. Its founder and former Chairman Richard Schulze early this month submitted a proposal to take the company private for $24 to $26 per share in cash, attributing equity value of over $8 billion to the company.
However, Schulze spurned the due diligence offer early this week as he was said to be unhappy with some of its terms. He has a 20.1 percent ownership stake in the company.
After the retailer announced a new CEO, Schulze said Joly is an accomplished executive, but Best Buy continues to face enormous challenges and needs a clear plan and a proven leadership team with deep retail experience and knowledge of Best Buy to win back customers, inspire employees and reinvigorate its trusted brand.
Schulze added that he would continue to pursue his proposal which would provide compelling value for shareholders.
BBY, which closed at $18.16 on Monday, is declining 10.16 percent in pre-market activity to $16.33.
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by RTT Staff Writer
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