Why Best Buy Shares Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of embattled electronics retailer Best Buy (NYSE: BBY  ) sank 12% in early trading today after its quarterly results and guidance disappointed Wall Street yet again.

So what: Best Buy unveiled a plan last week to improve returns and cut costs, but today's wide third-quarter miss -- adjusted EPS of $0.03 versus the consensus of $0.13 -- coupled with downbeat guidance for 2013 suggests that the task will be a lot tougher than expected. In fact, same-store sales fell 4.3%, reinforcing concerns that consumers continue to use the stores as showrooms for online purchases from the likes of Amazon (Nasdaq: AMZN  ) or eBay (Nasdaq: EBAY  ) .

Now what: For the full-year 2013, management now expects free cash flow of $850 million-$1.05 billion, which is down significantly from its prior view of $1.25 billion-$1.5 billion.

"On November 13, we shared our candid assessment of Best Buy's situation and unveiled Renew Blue, a set of priorities to begin reinvigorating the company's performance and rejuvenating Best Buy," said CEO Hubert Joly. "The results we are reporting today only strengthen our sense of urgency and purpose."

Given the gale-force competitive headwinds facing Best Buy, however, even the most brilliant strategic moves might not be enough to regain footing.

Interested in more info on Best Buy? Add it to your watchlist.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2121446, ~/Articles/ArticleHandler.aspx, 10/25/2014 9:55:45 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement