Best Buy Co Inc (NYSE:BBY) ended its fiscal second quarter with poor results. For the year, its stock price was down as much as 19% through Monday’s close. And today, the stock price fell by 6.85%.
Overall results for Best Buy Co Inc (NYSE:BBY) show that key numbers were down. Comparable-store sales declined 2.7%, domestic same-store sales declined 2%, and international comparable-store sales declined a whopping 6.7%. The 42% drop in operating income was caused by a 16% decrease in gross profit, while only posting an 11% drop in expenses.
On a positive note, there was a 22% increase in online sales due to inventory improvements to help augment their ship-to-store with ship-from-store capability.
Though, Best Buy Co Inc (NYSE:BBY) still turned a profit. Earnings per share were $0.42, which sufficiently covers the $0.17 dividend. Profits were helped by the Renew Blue strategy’s cost savings measures. Renew Blue is Best Buy’s restructuring initiative.
Fears of private-equity takeover looms over the company’s discouraging results. But the possibility of a takeover depends on how the company’s executives re-engineer the company through the Renew Blue initiative. Management is still expecting to gain more from this strategy going forward into the year as they aim to provide customers with better shopping experience, improve profit margins by cutting costs and to grow online sales.
Best Buy Co Inc (NYSE:BBY), as well as many other retailers, suffers heavy losses and tough competition from e-commerce giant, Amazon.com, Inc. (NASDAQ:AMZN), who is known for sacrificing profits to build its market share. Best Buy and other brick-and-mortar stores have this problem of “show rooming” where consumers will check out products in their stores but will ultimately buy from other channels, such as Amazon.
Amazon.com, Inc. (NASDAQ:AMZN) offers an online platform for consumers through its websites and they focus on selection, price and convenience. The company also offers programs that enables B2C, and C2C transactions.
This article has been written by John Aquino.