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Restructuring, Poor Sales Hurt Best Buy Profits

post #1 of 87
Thread Starter 
Restructuring, Poor Sales Hurt Best Buy Profits


Best Buy Co.'s shares were fluctuating in heavy trading Thursday after the giant electronics retailer reported a dip in fourth-quarter sales and profits, even while it beat earnings estimates. The Richfield-based company said its profits fell to $651 million, or $1.62 per share, for the three-month period ended Feb. 26 that included a $222 million charge related to a restructuring of its international business, with store closings in China. Earnings for the fourth quarter last year were $779 million, or $1.82 per share. Without the charge, earnings in the most recent quarter would have been $1.98 per share. Analysts polled by Thomson Reuters expected earnings of $1.85 per share on sales of $16.3 billion. Such estimates typically exclude one-time charges. Best Buy reported fourth-quarter sales of $16.26 billion, down less than 2 percent from $16.55 billion a year earlier. Same-store sales, a key retail metric, dropped 4.6percent.

For links and more stories visit the Hot Stories section at HomeToys.com
post #2 of 87
Thread Starter 
I put this up because I'm wondering if this is a long term trend or just a bad year for Best Buy. I for one have not been into an electronics store for years since I can buy everything online --- usually with free shipping.

Thoughts?

Bob
post #3 of 87
Bob-

That's part of the problem with our industry. Buying everything online will slowly kill the Specialty retailers. You may be capable of installing, operating and programming but the vast majority of internet shoppers have no clue how to set up most of the CE products they purchase.

This is not a rant at YOU per-se; just a observation.
post #4 of 87
Quote:
Originally Posted by Bob Hetherington View Post
I put this up because I'm wondering if this is a long term trend or just a bad year for Best Buy. I for one have not been into an electronics store for years since I can buy everything online --- usually with free shipping.

Thoughts?

Bob
I totally agree...I don't think I've made a purchase higher than $50 or so in a brick and morter store in years......Other reasons not to go to a store....sales tax, minimum wage "children" sales associates...the list goes on and on....

There are downsides, but can be worked through....
post #5 of 87
I'm not surprised. Their prices were always worse than Circuit City. When CC folded, BB prices and policies seemed to get even worse. I go in there only when they have a strong sell. Even at Christmas time they are not competitive.

Since BB has chosen to "restructure" as opposed to cut prices, its not likely they will survive. They will need another CEO that institutes different prices and policies, IMHO.
post #6 of 87
I worked for Circuit City when their stock was that low. It went up a bit during Christmas, but we all know what happened eventually. I don't want to see the day when Wal-mart and sears are the only big box stores left. Sure there is Fry's, but those aren't found everywhere. Let's hope things get better. Not that I buy anything there, but as an above post said, not everyone knows how to install CE products much less browse and purchase on-line.
post #7 of 87
Best Buy has terrible managment.

They regularly "test" ideas on the public just to see what they can get away with.

I've stopped buying big ticket items from them since I can usually get better prices from a smaller local chain.
post #8 of 87
Quote:
Originally Posted by David_B View Post
Best Buy has terrible managment.

They regularly "test" ideas on the public just to see what they can get away with.

I've stopped buying big ticket items from them since I can usually get better prices from a smaller local chain.
As an ex-best buy employee I confirm what u have said. We had what they called "team meetings" every other weekend to see who had an "innovative idea" for the company, that being a bundel, special, display arrangement etc..... usually there were strings attached meaning that the savings were actually no savings, they would trick the customer into thinking that they were saving a lot but they actually were spending the same amount or more.
post #9 of 87
Quote:
Originally Posted by Bob Hetherington View Post
I put this up because I'm wondering if this is a long term trend or just a bad year for Best Buy. I for one have not been into an electronics store for years since I can buy everything online --- usually with free shipping.

Thoughts?

Bob
I also prefer to buy online for reasons already mentioned here. I would give Best Buy executives some advice when they are considering how to retain the people that continue to shop at their stores: stop by Best Buy store #52 in Springfield, Missouri and observe the way that patrons are treated. What they will see, I maintain, is the reason supplementary to the Internet shopping age that will be the end of Best Buy.
post #10 of 87
Best Buy just launced a store here about two months ago. Everyone saw in the paper that they were coming. I made the statement "I bet they dont last a year". This post is starting to confirm my assumption.

I am another that do not buy from best buy. They are way overpriced, terrible sales associates, and did I mention overpriced. Monster *cough cough* cable.
post #11 of 87
Quote:
Originally Posted by kevin_mahaney View Post

I also prefer to buy online for reasons already mentioned here. I would give Best Buy executives some advice when they are considering how to retain the people that continue to shop at their stores: stop by Best Buy store #52 in Springfield, Missouri and observe the way that patrons are treated. What they will see, I maintain, is the reason supplementary to the Internet shopping age that will be the end of Best Buy.

Ha, I worked at that one years ago when I went to SMSU (well MSU now). I'm pretty sure I was the only one who actually cared about customer service and treating customers well. I couldn't stand it so I didn't work there long.
post #12 of 87
I have bought lots of my stuff from them over the years and quite honestly there customer service sucks. Not surprised if they end up the way circuit city went.
post #13 of 87
Is this the reason why they (Best Buy) joined force with Wal-Mart, Sears, etc to force Amazon to collect tax from online buyers?
post #14 of 87
I use best buy if I absolutely can't wait for something and its the only store around, I'll gladly give my money to local business over those ********s any day. As people become more tech savy, they will realize best buy is a rip off for most everything and do their shopping online like the rest of us.

Best Buy will be a thing of the past in 10 years time.
post #15 of 87
A few years back BestBuy went on a mission to get rid of their "deadbeat" customers... You know the ones that only got things on sales leader with 0% interest and paid off their credit card before paying any interest... Customers like me who haven't been in a BestBuy in years.
post #16 of 87
Best Buy went from being my heaven on earth place to one that i almost dread going in to. It has nothing to do with online. It has everything to do with their idiot sales people and their atrocious "customer service". I got sick of the long lines and checkout and even longer lines if you ever had to return something. Dont even get me started on how ridiculous it is to try to get someone on the phone. 9 times out of 10, you can never get someone to pick up the phone. About 3 years ago, I was a premier reward zone customer. In the past 3 years, I doubt i've spent more than $250 combined.

The only time I even think about setting foot into a best buy is only if I absolutely have to or if i want to see an item before buying it online. I try to give them as little of my money as possible.
post #17 of 87
I can't stand the place. For years it seemed that every time I was in there, I would overhear one of their salespeople giving out incorrect information to customers. Just the other day, one of these sales people told my elderly father that if he purchased a Sirius/XM radio, he would get "every radio station in the country." My father asked if he would be able to listen to the football games of his alma mater, and the associate said, "Of course!"

It was all BS, of course. I've warned him before never to listen to anything these people say, but he's old and he doesn't understand how incompetent they are.

And I don't know who designed their new store layout, but whoever it was seems to be on a mission to make their merchandise as hard to find as humanly possible. It took me 20 minutes of wondering around to find Season 6 of Lost of BRD.
post #18 of 87
Speaking of "testing" things out on customers, I just found out that BestBuy recently started asking for Photo IDs (Driver's License) from customers that they then record into their systems - And this is for items returned WITH a receipt and within the published return period (14 days/30 days depending on item), whereas in the past, IIRC, they recorded Driver's license only for returns without receipt.

In this age where customers might be more wary/concerned about their sensitive info being stolen from corporate servers - talk about ways to alienate customers
post #19 of 87
Quote:
Originally Posted by Bob Hetherington View Post

I put this up because I'm wondering if this is a long term trend or just a bad year for Best Buy. I for one have not been into an electronics store for years since I can buy everything online --- usually with free shipping.

Thoughts?

Bob

Best Buy is the Walmart of electronics. You think it's cheap but in fact they sell bad products mostly Made in China (few support for American brands made in USA) at a steep price. Nowadays, you can buy everything online and get free shipping and no tax from reputable sites who offer better return policy than most stores and much better products and customer service (Live Chat with knowledgeable agents, etc...). Big Electronic Stores with poorly knowledgeable sales associates and expensive crappy products are on their way to Hell and I can assure you that we won't miss them. Next in line are PC Richards & Crap, 6th Ave and Electronics Expo.
post #20 of 87
My view as far as the trend goes is that eventually you will always have a year that isn't as strong as others or falls short of exectations. I don't think it will have to be the "writing on the wall" of a downspiral.

With that being said I personally hardly ever buy stuff there but I do use the place to physically check some big ticket items like tvs. Not so much from a picture quality standpoint but it is a nice place to see the tv aesthetics, picture control options and what not.

The thing I don't like about the place is that they are generally not very versed in home theatre tv/audio. The things I have heard them tell people border on flat out untruths and are absolutely misleading but don't fault the kids who work there as they are basically just repeating the marketing specs of cards. Dynamic contrast ratios, response times and other worthless specs that fool the average consumer.

For the niche crowd of people like well studied avsforum members the place is an absolute joke for ay type of informed purchase. However in many markets people don't have specialty electronic stores that aren't big box stores so they depend on someplace like best buy and often make poor purchases.

With the ever growing wealth of information some consumers come to realize they were scammed on an HDMI cable or something. (I make sure none of my coworkers fall for that stuff)

I also think places like Amazon and Newegg and various other places have an advantage that a physical store just can't hang with. Best Buy flat out can't match the prices and are often close to MSRP.

A few weeks back as the 2010 models were closing out the prices on a Panasonic VT25 was basically still at MSRP and a LOT more than what you would pay on an Internet deal that would be tax free for most people and free delivery right to your house. I think this is their biggest hurdle as online shopping becomes bigger and bigger.
post #21 of 87
I go to bestbuy for all big ticket items like TVs and such for I just cannot see having a 55 inch tv shipped when I can pick it up local.

That said bestbuy is the lowest price in my town on these items for the one local electronics store we have is always a couple of hundred dollars more expensive onthe same exact item the model numbers are the exact same and for this fact I will continue to shop at bestbuy.

I spent $4000.00 dollars at bestbuy in 2010 and have already spent $2000.00 in bestbuy in 2011.
post #22 of 87
Quote:
Originally Posted by Bob Hetherington View Post

I put this up because I'm wondering if this is a long term trend or just a bad year for Best Buy. I for one have not been into an electronics store for years since I can buy everything online --- usually with free shipping.

Thoughts?

Bob

It was a transitional year, in a sense. The year before last they had a big opportunity to capture market share with the demise of CC. Last year, a lot of companies filled that void which gave people other options.

Only time will tell.
post #23 of 87
I pretty much agree with everything said here, and while I too don't buy anything over $50 at Best Buy, there is one thing I'll always buy at a brick and mortar store. My TV.

I've heard wayyy to many bad stories about shipping TVs.

I'll shop around at Costco, Best Buy, Frys, etc. and get the best deal I can. But even if I could get it for a little less online, I'd still go and get it myself. I've seen how shipping companies handle their packages, even big ones. And theres no way my TV will ever be handled by those fools.

I'd rather my TV be shipped on a pallet to a storee, then handled by me. Just thinking about a TV getting shipped to my door via a regular shipping company gives me the chills.
post #24 of 87
Quote:
Originally Posted by mike171979 View Post

.....
I've heard wayyy to many bad stories about shipping TVs.
.....
I'd rather my TV be shipped on a pallet to a storee, then handled by me. Just thinking about a TV getting shipped to my door via a regular shipping company gives me the chills.

If you purchase the insurance from UPS or Fedex when choosing shipping option you are guaranteed to have your TV in as good condition as pick up.
post #25 of 87
Quote:
Originally Posted by Shadow Macho View Post

If you purchase the insurance from UPS or Fedex when choosing shipping option you are guaranteed to have your TV in as good condition as pick up.

Even if I did that, and the TV worked when I got it, I'd still be worried about something being wrong.

Thats why I can't stand the idea of buying a DSLR from an online retailer. The thought of my DSLR being shipped through the mail is just as appalling
post #26 of 87
Given I saw a "Best Buy" sign being installed above a new shop unit in my home town of Nottingham England, I guess part of their restructuring plans include expanding their markets into Europe...
post #27 of 87
Does what happens to BB in the USA also reflect what is going on in other countries like Canada? Online isn't developed like in the states so most people still buy their product from B&M stores. Right within a 2 KM radius of where I live are: The Source (Radio Shack), Future Shop (Best Buy), Leons (Furniture store), Sears, Wal-Mart, Staples (computers and stationary), local B&M specialty stores, the list goes on and on. We'll have to wait and see what sales figures in my country (Canada) have to say about the state of such stores but from past numbers many things are regional. Our Wal-Mart for instance used to be the sales leader for all of Ontario because it was isolated and had no competition. That included the biggest stores in the Toronto region and was only outmatched by the distribution center in Barrie. Pretty good for an area of only 150,000 people. I've seen franchises that were viable up where I am go under because the parent company down in the Toronto region had a bad time of it. Actually seen lots of that happen over the past 20 years. Most folks up here buying TVs for instance now shop at Wal-Mart for the best price followed by Future Shop and for high end gear, one of the last electronics specialty stores in the city. Don't know how it is in other areas since I seldom travel outside of mine...
post #28 of 87
The last time I was in a Best Buy the area where the AV products were displayed was so dark you could not see the markings on the equipment much less the rear input and out puts. On line I can see them all and even print out a picture for reference. I purchase all my big ticket items on line and as an electronic hobbyist I no longer go to Radio Shack. All they want to sell are cell phone and batteries. You can't even buy a raw speaker there anymore.
post #29 of 87
One of their main profit making sources is Geek Squad. Any sale of any geek squad service is about 80% profit. Most stores rely on Geek Squad services for a lot of their daily profit.
post #30 of 87
The BB's in the Washington DC area seem to be doing fine. They were packed at Christmas time last year.

I do purchase stuff at Best Buy, but pretty much only if it's on sale for a good price.

Where Best Buy really fails is in customer service and prices. Most of their prices tend to be MSRP. If they were smart, they would discount the products they sell across the board. There is alot of markup on electronics and if you give someone a reason to want to buy from you rather than go on-line or somewhere else, even though you make less money, you will make it up in volume.

In terms of customer service......they usually only have one person working that department.....long lines for returns......my guess is that they are thinking this will discourage you from wanting to return something. Price matching is hit or miss. I've actually gone to one Best Buy with a competitor's ad only to be turned down for some obscure reason and gone to another one where they honor the match.
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