Best Buy has issued a warning that earnings and same-store sales would be less than expected for its third quarter. Compounding the losses, U.S. business president Mike Vitelli will depart the company at the end of the fiscal year with a lump-sum payment of $1.45 million, and the executive vice president of U.S. operations, Tim Sheehan, will leave the company at the end of October.
BB&T Capital Markets analyst Anthony Chukumba believes that “the one thing that Joly does not have is retail experience. So you would think that he would really kind of lean on Vitelli.” Chukumba added that “you start to wonder, ‘Are the wheels kind of coming off here?'”
Best Buy shares fell to $15.77 in after-hours trading from a $16.92 close at the end of business prior to the announcement on the New York Stock Exchange. The company also said Wednesday that it would hold an investor day on November 1 to discuss Joly’s plans for the future.
Best Buy has commenced a plan to save $800 million by its fiscal 2015 that would see it close 50 of its “big-box” stores during its fiscal 2013, which started at the beginning of March. The retail chain expected these and other cost savings to cut $250 million in 2013 and $300 million in costs just in retail by the 2015 target.
Other focus shifts in an attempt to save money include fewer large-screen televisions stocked, a reduction in the DVD and CD aisles, and an increase on tablets, e-readers, and mobile phones, emphasizing Best Buy’s existing strengths in marketshare over its competitors. The alterations in strategies are an attempt to to lure in customers, reversing a downward trend of store visits. Shoppers today visit Best Buy twice a year on average, rather than 10 times a year as they did a decade ago.
