Best Buy income drops 90 percent

Associated Press

NEW YORK

The news just keeps getting worse at Best Buy each day.

To top off an already eventful several days for the nation’s largest consumer- electronics retailer, Best Buy Co. withdrew its full-year earnings guidance Tuesday after reporting a 90 percent drop in net income during the second quarter, dragged down by restructuring charges and weak sales.

The poor report comes a day after Best Buy named Hubert Joly, former CEO of the Carlson travel company and turnaround expert, as its new CEO and president. It was expected that Best Buy would pick someone with retail experience, and Wall Street didn’t respond well, sending Best Buy shares down 10 percent.

And before that, the board and Richard Schulze over the weekend waged a public fight over the co-founder and former chairman’s plan to take the company private.

Best Buy has been engulfed in mounting controversy since April when former CEO Brian Dunn resigned amid a company investigation into an “improper relationship” with a 29-year-old female employee. Schulze resigned as chairman a month later after the probe found that he knew about the relationship and failed to alert the board or human resources.

The series of bad news that has followed comes as Best Buy fights to reverse a decline in its business due to a weak global economy and consumers’ changing shopping habits. Best Buy’s stores are becoming unprofitable as customers increasingly use them to browse for electronics, then buy them cheaper online or elsewhere. On top of that, shoppers no longer are snapping up big TVs and computers at a fast clip like they used to, instead opting for smaller gadgets such as cellphones and tablets.

In fact, during the latest quarter, U.S. sales growth in tablets, mobile phones, appliances and e-readers helped offset declines in gaming, digital imaging, televisions and notebook computers.