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Tomorrow, embattled electronics giant Best Buy will report quarterly results for its second quarter, with expectations for the company to see revenues fall some three per cent year-on-year.Analysts polled by Bloomberg forecast Best Buy will post earnings of $0.31 a share on revenues of $10.6 billion — both representing declines from the year ago and prior quarter.
Part of that deterioration stems from the retailer’s decision to shutter more than 50 stores this year and layoff thousands of employees as it trims more than $800 million in costs.
Jefferies’ Daniel Binder, who forecasts a below consensus quarter, expects same-store sales to fall further during the quarter.
Nonetheless, the company’s results during the period will likely be of less interest to analysts and investors on the company’s conference call than a series of struggles and changes within its senior ranks.
Last week Best Buy founder Richard Schulze offered to buy out the electronics company, for as much as $8.84 billion.
Schulze sent a letter to the company’s board of directors this morning offering $24 to $26 a share, a 30 per cent premium to trade.
It also follows today’s announcement that Best Buy would appoint Hubert Joly its new CEO. Joly, a former hospitality executive, will replace interim-Chief Mike Mikan in September. Joly is not expected to be on the conference call tomorrow.
The leadership change could delay Best Buy’s turnaround plans as Joly is brought on board, and shares tumbled more than 10 per cent over the trading day after the company announced Joly’s appointment.
“We suspect the cornerstone of the strategy will probably be building the services business, while at the same time focusing on additional cost cutting so that it can reinvest in price and protect market share,” Binder says. “A large-scale turnaround could take 2-3 years and may be better executed as a private company.”