Best Buy was being heavily discounted by the market on Thursday, after the retailer unveiled a management shakeup and reduced its profit expectations for the third quarter. The company, which operates 1,400 stores selling electronics goods, warned late Wednesday that it expects profits to drop by at least 10% in the third quarter, compared to last year. Best Buy also expects sales to decline at a similar pace to what it has experienced earlier this year.
Analysts note the company is fighting to reverse a two-year decline in its business because of changing consumer habits, as well as a weak global economy. In particular, the retailer’s stores are becoming less profitable as customers increasingly use them to browse for electronics, then buy products cheaper online or elsewhere. As well, shoppers are increasingly opting for gadgets with less profit for merchants, such as cellphones and tablets, rather than big-ticket TVs and computers.
Best Buy (BBY : NYSE : US$15.17), Net Change: -1.75, % Change: -10.34%, Volume: 15,908,892