The retailer said the past 90 days have been “the most challenging consumer environment” it has ever faced and will reduce store openings in the US, Canada and China as well as cut costs. It may also enforce redundancies, “depending on the outcome of the voluntary program”.
In the third quarter to November 29, like-for-like sales dropped 5.3 per cent. Net earnings fell from US$228 million (£148m) to US$52 million (£34m).
Revenues including Best Buy Europe – its European joint venture with Carphone Warehouse - increased to US$11.5 billion (£7.49bn) versus US$9.9billion (£6.4bn) in the same period last year. Excluding Best Buy Europe third quarter sales “declined modestly” versus the same period last year.
The retailer said the reduction in earnings was due to a non-operating impairment charge of US$111 million (£72.3m) related to the decline in the market price of its 3 per cent stake in Carphone Warehouse.
Best Buy chief executive for international and chief information officer Bob Willett said the retailer was “working closely together on preparations for our first Best Buy stores in the United Kingdom next summer."
Best Buy vice chairman and chief executive Brad Anderson said that “dramatic” changes in consumer behaviour could be “long-lasting”.
“We also believe that customers will continue to reward those retailers who understand their needs and desires, and offer relevant solutions at fair prices,” he added. “Yet we clearly recognize that these changes require us to make significant adjustments to our present cost structure."
In the current year, selling, general and administrative costs, excluding Best Buy Europe, are set to grow by 9 per cent. The retailer is planning for the costs to grow by no more than 2 per cent over this year’s levels.
The retailer forecasts that like-for-likes will be between 1 and 5 per cent in the 2009 financial year.
Today, pan-European electricals group Kesa also unveiled plans to cut capex “significantly” next year after a disappointing first half.
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