Best Buy Reports $13M Net Loss in Q3, Calls Performance "Clearly Unsatisfactory"

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News Posted: Tue, Nov 20 2012 1:24 PM
Best Buy on Tuesday didn't pull any punches when reporting its fiscal third quarter 2013 earnings, calling its performance "clearly unsatisfactory." The struggling electronics chain reported a GAAP net loss of $13 million for the three-month period ended November 3, 2012, compared to net earnings of $173 million during the same quarter one year ago.

"In line with trends experienced over the last three years, Best Buy’s third quarter financial performance was clearly unsatisfactory. On November 13, we shared our candid assessment of Best Buy’s situation and unveiled Renew Blue, a set of priorities to begin re-invigorating the company’s performance and rejuvenating Best Buy. The results we are reporting today only strengthen our sense of urgency and purpose," said Hubert Joly, Best Buy president and CEO.

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Joly's candid remarks are a breath of fresh air when company execs typically try to sugarcoat poor performance, though words alone won't cure what's ailing Best Buy. Store sales were down during the quarter, contributing to a significant decline in adjusted (non-GAAP) operating income, which has fallen 87 percent year-over-year.

It wasn't an entirely grim quarter though. Best Buy recorded $431 million in its online business, exceeding 10 percent growth, while also registering positive comparable store sales growth in mobile phones, appliances, and tablets/eReaders. However, that growth was "more than offset" by slumping store sales of notebooks, gaming products, digital imaging, and televisions.

"The company believes that tablet and notebook comparable store sales were negatively impacted by slower consumer purchasing in anticipation of major product launches," Best Buy said.

Looking ahead in the short-term, Best Buy will inevitably benefit from the holiday shopping season, starting with Black Friday and continuing through Cyber Monday. It was reported that shoppers had already started camping out in front of some Best Buy locations a week ahead of Black Friday.

Best Buy Store
Image Source: Flickr (daysofthundr46)

Best Buy earlier this year announced plans to shut down 50 U.S. big box brick-and-mortar retail locations, which was part of a restructuring effort to cut costs by $800 million.
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sackyhack replied on Tue, Nov 20 2012 2:08 PM

I think my most recent BB experience might be a good example of why their business is declining. On an impulse I decided I wanted a GTX 660. Walked into BB, saw an empty space for it, with the price tag of $250. I asked about it, and first of all the guy didn't even seem to think that was a real thing. Goes to check and tells me that they could order it for me, and it'll be here in 4-5 business days. I said no thanks and went home. Looked it up on Amazon. The EVGA SC version was on sale for $230, and I'm a prime member so I had free 2 day shipping.

I think the people who would want the products BB is carrying are also the type that would do the same sort of double-take and internet purchase that I did. I don't see how the retail side can compete with places like Newegg or Amazon. Makes sense that their online store is doing better.

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sevags replied on Tue, Nov 20 2012 3:36 PM

I use I frequent best buy several times a month even if out of boredom or to see what's out and I did this for years. Three years ago I actually worked for Best Buy as a CS for 6 months before the stress of a low paying second job got to me and I quit. Since then my visits became less frequent and I have actually not stepped inside a best buy store in 20 months and I only visit their website to compare prices to amazon before I always go ahead and order from amazon.

Best Buy isn't going to survive hey can't offer a compelling reason to shop with them anymore their prices are not cheaper than alternatives, their employees are not knowledge at all, their return policy isn't any better than alternatives, their variety of products don't compare to online options, their in house products like dynex and rocketfish are so cheap that I would never consider buying them, so what's left? The instant gratification of instantly buying a product rather than waiting for delivery? I have 2 Frys Electronic stores within a 15 minute drive from me that I much prefer over BB any day.

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My son went to Best Buy two days ago to purchase an SD card that was on sale. The store was *out* of the SD card, although their inventory system said there were 57 in stock. My son left the store and purchased online elsewhere. 

 SPAM-posters beware! ®

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RWilliams replied on Tue, Nov 20 2012 4:02 PM

The problem is that most of their customers sleep on the outside, rather than go in and buy things.

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realneil replied on Tue, Nov 20 2012 8:12 PM

They should offer free computer repair and only charge for parts. That will bring people in.

Dogs are great judges of character, and if your dog doesn't like somebody being around, you shouldn't trust them.

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sackyhack replied on Tue, Nov 20 2012 8:15 PM

That'd be like, the exact opposite of what Best Buy's Geek Squad does. Charge money for doing nothing:

http://kotaku.com/5656655/seriously-this-should-be-illegal-part-ii

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OSunday replied on Tue, Nov 20 2012 9:21 PM

The fact they were price matching microcenter for PC parts is a sign of hope...

Apparently their at the very least aware that the reason their not doing so well is because of the more affordable options elsewhere and just as convenient online options (Such as Amazon prime) that make high prices, and bad customer service even more undesirable than they already are, even at the sake of the convenience of instantly having an item..

Geek Squad... and their sale of HDMI cables in particular are a whole nother story in and of themselves..

Either way Best Buys future is looking pretty bleak, even with hundreds of people lining up outside their stores for Black Friday...

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I am not surprised. The mark up of product in their stores is ridiculous. I have not stepped into a BB in years because of this. Frys Electronics offers much better prices for the exact same product, if you need it now. And if you can wait a few days, Newegg and Amazon are just amazing.

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rapid1 replied on Tue, Nov 20 2012 11:37 PM

There are just better options even if it is in B&M stores than BB. I would rather go to Fry's or Microcenter any day than BB. Now supposedly there going to match online prices as well like most anyone does now. I think there going the way of Circuit City/CompUSA if there going anywhere though!

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sackyhack replied on Wed, Nov 21 2012 2:40 PM

Now having done my complaining about BB, I did feel way more comfortable buying my giant tv from BB than I did online. I liked seeing the screen in the store and having a better sense of its proportions. And they price-matched to some online store's cheaper price. Maybe that could be their focus, big ticket items, rather than trying and failing at competing with do-everything online stores like amazon and Newegg.

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sevags replied on Wed, Nov 21 2012 3:17 PM

Sackyhack, it's all about what you know and when you need it... When it comes to my next tv I already know its going to be a Samsung and only a Samsung and I know it's going to be 55", with those two stipulations the number of models to choose from are very small and if I choose to pick from only the latest models that further reduces my choices and there is no need to step into a B&M store. I also know the dimensions of tv's without having to see them in person and if I really needed to the dimensions of all tv's are listed online and I can mark my wall using a tape measure to figure out the tv I want.

Also on the flip side when you walked into BB to " visualize" your tv once you chose the model on wanted you could go home and order online for cheaper still making BB obselete.

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