Best Buy names search committee to replace former CEO Brian Dunn

RICHFIELD, Minn., Fri Apr 20, 2012  – Best Buy Co. Inc. on Friday named the board members that will search for the electronics retailer’s next chief executive.

Kathy Higgins Victor, who is also on the retailer’s compensation and human resources committee, will chair the search committee. Board members Lisa Caputo, Ronald James and Sanjay Khosla will also be on the search committee.

The company said it will announce which executive search firm it retains in the next few weeks.

Best Buy’s board last week said it expected to take six to nine months to find a permanent replacement for CEO Brian Dunn, who resigned abruptly last week. Mike Mikan was named interim CEO when Dunn abruptly resigned amid a probe into allegations of personal misconduct.

Best Buy CEO Dunn steps down as shoppers move online

RICHFIELD, Minn., Tue Apr 10, 2012 – Best Buy Co. CEO Brian Dunn has left the world’s largest consumer electronics chain, which has struggled against stepped-up competition from internet retailers and discounters.

Under Dunn’s tenure, which lasted less than three years, critics have complained that Best Buy became a showroom for Amazon.com and other Internet retailers, with consumers going to Best Buy stores to sample electronics like high-definition televisions, but then buying them elsewhere at lower prices.

The company, seen as a bellwether in the consumer electronics industry, reported declines in same-store sales in six of the past seven quarters, including during the 2010 holiday season, when it made a bad bet on technology like 3D television that consumers did not embrace.

Despite offering bigger discounts and free shipping to lure shoppers in the 2011 holiday season, same-store sales fell 2.4 percent in the latest quarter, including a 2.2 percent decline at U.S. stores open at least 14 months.

“I hate to be rude, but I think he (Dunn) was doing a terrible job. This is a company that had a sales guy in charge, and I just don’t think they are well-positioned to deal with the onslaught from the Internet,” said Michael Pachter, analyst at Wedbush Securities.

“They have a big disadvantage to the Internet retailers because they have a big cost structure. So they need a guy who can fix that rather than trying to sell more stuff.”

Best Buy sales disappoint, to cut stores, jobs

RICHFIELD, Minn., Thu Mar 29, 2012 – Best Co. Inc. reported weaker-than-expected sales for the fourth quarter on Thursday, and said it has decided to close 50 big-box stores and to cut 400 jobs in corporate and support areas.

Despite offering bigger discounts, the world’s largest consumer electronics chain saw weak demand for gadgets in the holiday selling season.

Net loss was $1.7 billion, or $4.89 a share, for the fourth quarter ended March 3, compared with net income of $651 million, or $1.62 a share, a year earlier. Excluding charges, it earned $2.47 a share.

Sales rose to $16.63 billion, but fell way short of the analyst average estimate of $17.23 billion.

The retailer said it expects its restructuring efforts to save about $800 million in costs by fiscal 2015, including about $250 million in the current fiscal year.

Former Starbucks executive to be Best Buy digital chief

NEW YORK – Fri Mar 9, 2012: Best Buy Co. named former Starbucks Chief Information Officer Stephen Gillett as the head of its digital and global business services, effective March 14.

The news comes as the world’s largest consumer electronics chain looks to find better ways to woo mobile and online shoppers, and tries to fend off rivals like Amazon.com .

In this newly created position, Gillett, 36, will oversee Best Buy’s ecommerce businesses, information technologies and global shared services.

Gillett will also be in charge of Best Buy’s digital strategy and marketing efforts, and finding new ways to “make technology a bigger part of the customer experience while enhancing operations and processes,” the company said on Friday.

Gillett will report directly to Best Buy Chief Executive Brian Dunn.

In an interview ahead of the official announcement, Dunn said he saw Gillett accelerating Best Buy’s transformation from best-in-class consumer electronics physical retailer to a multi-channel retailer.

Dunn expects Best Buy’s online business to more than double in the next five years, and said the company was keen to build on the online sales growth seen during the past two quarters and in December.

“We want to build on that momentum and Stephen’s track record makes it clear that he can help us engage customers online in ever more compelling ways,” said Dunn.

Under Gillett’s leadership, Starbucks decided to provide free Wi-Fi at all its U.S. outlets to boost customer traffic. He was also instrumental in helping Starbucks launch an in-store digital network with Yahoo , allowing customers to access local news, restaurant reviews and business news sites.

Best Buy impresses with market share, profit view

RICHFIELD, Minn. ― Best Buy Co. appeared to gain market share from rivals in the United States during the key holiday season and stood by its profit outlook for the financial year despite a 1.2 percent same-store sales decline in December.

The news boosted Best Buy shares nearly 3 percent and also allayed some concerns that all its holiday sales were driven by profit-sapping discounts.

The world’s largest consumer electronics chain said on Friday that sales at stores open at least 14 months fell 0.4 percent at its U.S. unit, while they slipped 4.3 percent internationally on weakness in Canada and Europe.

“Given competitor comments and supplier input, these are relatively impressive results,” Credit Suisse analyst Gary Balter said, adding that “the reconfirmation of… guidance by management should put to bed the worries of massive margin deterioration to drive those sales.”

While the international same-store sales number missed most analyst expectations, many such as David Strasser at Janney Capital Markets and Anthony Chukumba at BB&T Capital Markets said they were happy with Best Buy’s domestic performance, especially since they believe the chain gained market share in the United States during the key selling season.

“It does appear that Best Buy, at least from a brick-and-mortar perspective, picked up market share in December,” Chukumba said, pointing to weak performance in the consumer electronics sector by Costco Wholesale (COST.O) and Target Corp (TGT.N). Best Buy shares were up 2.9 percent at $24.12 Friday morning on the New York Stock Exchange.

“It is good enough from my perspective,” Chukumba said. “I am just happy they are going to make (profit numbers for) the quarter.”

Unlike the 2010 holiday season when Best Buy held the line on discounts and promoted only pricey goods, this time around it offered deep discounts on items ranging from flat-screen TVs to digital cameras.

Best Buy a winner as holiday weekend sales surge; record set

NEW YORK ― U.S. retailers racked up a record $52.4 billion in sales over the Thanksgiving weekend, a 16.4 percent jump from a year ago, as early hours and attractive promotions brought out more shoppers, an industry trade group said on Sunday.

Among the early winners after the traditional start of the holiday shopping season was Best Buy Co Inc., a reversal from 2010 when the electronics retailer’s erroneous bet on 3D televisions led to a disappointing season.

Best Buy drew in shoppers by being one of the companies that opened its stores at midnight Thanksgiving night, and unlike in 2010, it focused more on having lower prices for big TVs and other popular items.

“Last year, they weren’t as responsive with their pricing as they needed to be. We are seeing a different set of behaviors from them this time around,” said Lawrence Creatura, a portfolio manager at Federated Clover Investment Advisors.

Overall, a record 226 million shoppers visited stores or online shopping sites from Thursday through Sunday, up from 212 million last year, according to a survey from retail industry trade group the National Retail Federation. The survey was conducted by online research firm BIGresearch.

The number of shoppers and the amount of spending surprised analysts who had expected sales to be tempered by a 9 percent unemployment rate, high costs for gasoline and concerns about fiscal uncertainty in Europe.

But it is not at all certain that retailers will be able to keep the momentum going for the rest of the season.

“One swallow does not a holiday season make. After the deepest recession in decades, the solid Black Friday weekend is welcome news, but we’re only in the second quarter of a long playoff game,” said Craig Johnson, president of consulting firm Customer Growth Partners.

The holiday shopping season that traditionally kicks off on Black Friday — the biggest day of the year for retailers — is closely watched by investors as consumer spending accounts for about 70 percent of the U.S. economy.

The National Retail Federation forecast a 2.8 percent increase in sales for the November-to-December holiday season, down from the 5.2 percent increase in the same period last year.

Many retailers opened at midnight or earlier on Thanksgiving, pulling in younger people who were willing to stay up late for deals on electronics and toys instead of getting up before dawn on Friday.

“Consumers have finite cash. If you can be the retailer who gets that cash first, you are likely to be more successful in the holiday selling season,” Creatura said.

Best Buy bags U.S. mobile venture, axes United Kingdom chain

RICHFIELD, Minn. ― U.S. retailer Best Buy Co. Inc. is buying its British partner out of a fast-growing U.S. mobile phone joint venture for $1.3 billion and scrapping plans for a chain of European megastores, it said on Monday.

The moves are the latest sign Best Buy is scaling back its overseas ambitions to focus on its main U.S. business, which faces stiff competition from discounters and online retailers. Earlier this year, the U.S. group dropped plans for Best Buy-branded stores in China and Turkey.

The decisions also underscore the gloomy outlook for European retailers as consumers there grapple with rising prices, subdued wages growth and government austerity.

Best Buy said it would buy out Carphone Warehouse Group Plc from a profit share agreement of their Best Buy Mobile venture in the United States, which has been benefiting from soaring demand for smartphones like Apple’s iPhone.

The deal, along with a new venture aimed at replicating Best Buy Mobile’s success in emerging markets, helped to move attention away from the closure of the pair’s loss-making megastores business in Britain, as well as a larger-than-expected drop in Carphone’s first-half earnings.

Carphone shares were up 1.5 percent at 350 pence, outperforming a 1.3 percent fall in the STOXX Europe 600 European retail index.

Barclays analysts said Carphone was getting a good price, with the 838 million pound ($1.3 billion) deal worth more than the entire equity valuation of the British group when it was demerged from telecoms arm TalkTalk last year.

Carphone said it would return proceeds from the deal to investors, giving a big windfall to founder Charles Dunstone.

Dunstone, who owns about 29 percent of Carphone Warehouse according to Reuters data, has been praised by investors for striking his initial deal with Best Buy in 2008, shortly before a plunge in equity market valuations.

Best Buy said taking full control of Best Buy Mobile and closing British megastores would add 35-40 cents to fiscal 2013 earnings. The one-off cost of both actions, plus a non-cash impairment to write down goodwill, was $2.6 billion, it added.

Best Buy bought 50 percent of Carphone’s retail operations for about $2.1 billion in 2008 to tap the British firm’s expertise in mobile phones and to act as a springboard for expansion across Europe.

While the U.S. mobile phone business has exceeded expectations, the plans for a chain of European megastores have been hit by weak consumer spending, low brand recognition and competition from incumbent players such as Dixons.

Best Buy backs outlook despite weak second quarter demand for televisions

RICHFIELD, Minn. ― Best Buy Co. Inc. backed its sales outlook for the year despite missing revenue expectations in the second quarter on weak demand for televisions, and its shares rose.

The world’s largest consumer electronics chain reassured investors that it was in a better position to compete with rivals in the upcoming holiday season.

In its second quarter ended Aug. 27, sales were essentially flat at $11.3 billion, while analysts expected about $11.5 billion.

Sales at stores open at least for 14 months fell 2.8 percent, making it the fifth straight quarter of same-store sales declines.

Still, the retailer, seen as a bellwether in consumer electronics, said it continued to expect annual revenue of $51.0 billion to $52.5 billion.

Second-quarter net profit fell to $177 million, or 47 cents a share, from $254 million, or 60 cents a share, a year earlier.

The results echoed those from smaller rival hhgregg Inc. as well as office supply chains Office Depot Inc. and OfficeMax Inc. that reported weak sales of technology products in the key back-to-school season.

Best Buy profit, sales top estimates

 NEW YORK (MarketWatch) — No. 1 U.S. electronics retailer Best Buy Co. said Tuesday that its fiscal first-quarter profit fell 12 percent, hurt by increased promotions and lower demand for items including flat panel televisions and digital cameras.

Still, its shares jumped 6.1 percent in premarket trading after its profit and U.S. same-store sales declined at a slower pace than analysts were looking for. Best Buy stock has fallen 16 percent this year in part amid increased concern about competition from its online rivals.

Net income dropped to $136 million, or 35 cents a share, from $155 million, or 36 cents, a year earlier. Sales in the quarter ended May 28 rose 1.4 percent to $10.9 billion.

The company kept its full-year outlook for adjusted profit of $3.30 to $3.55 a share. It sees sales to be at the higher end of its previously guided range of $51 billion to $52.5 billion.

Analysts surveyed by FactSet estimated the Richfield, Minn.-based retailer to earn 33 cents a share on sales of $10.7 billion in the first quarter and $3.46 a share for the year. Best Buy shares jumped 6.1 percent in premarket trading.

Comparable sales, or sales at Best Buy stores, call centers and Web sites operating at least 14 months, fell 1.7 percent, including a 2.4 percent decline in the U.S., because of lower sales of TVs, digital cameras and CDs and DVDs.

Analysts were looking for a U.S. sales drop in the range of 3 to 5 percent.

Among the bright spots, however, domestic online sales rose 12 percent while domestic mobile-phone comparable sales jumped 28% with connections increasing 20 percent. Tablet computers, digital book readers, appliances and services also saw higher demand.

Outside of the U.S., comparable sales rose 0.4 percent, helped by the company’s Five Star business in China. Europe and Canada both saw lower sales.

Gross margin, or percentage of sales left after minus the cost of goods sold, narrowed to 25.3 percent from 25.9 percent, hurt by increased promotions, higher transportation costs and supply chain interruptions of digital cameras from the fallout of the March 11 quake in Japan.

Selling, general and administrative expenses dropped to 22.7 percent of sales from 23 percent.