Best Buy reports second quarter drop in profits

Published:  22 Aug at 9 AM

Best Buy, the US electronics retailer, has seen the value of its stock fall by four per cent after it published disappointing second quarter results. The firm reported a drop in net profits from $150 million during the same quarter last year to just $12 million in 2012. The company recorded revenues of $10.6 billion for the three months and admitted that profits had been hit by a one-off charge of $91 million relating to store closures.

Since May 2006 when Best Buy shares were worth $56.66 the company has seen nearly 70 per cent stripped from their value. The firm is struggling against strong online competition from companies including Amazon which are able to sell products at lower margins because of reduced overheads.

Best Buy said in March this year that it hoped to save around $800 million by trimming costs. It also announced that 400 corporate jobs were to go and the closure of 50 stores. The company controls 50 per cent of Carphone Warehouse in the UK. In 2010 the company opened 11 Best Buy stores in the UK, all of which were forced to close within a year.

For the three months ending at the beginning of August, Best Buy reported a 3.2 per cent drop in sales at stores which had been open for 14 months or more.

In June, the company said it would be introducing further cost cutting measures by redesigning its larger stores which it believed had simply become showrooms for customers who intended to browse and then buy the products more cheaply over the internet.