Bad News For Best Buy: Profits Plunge 90%

Best Buy, which has , is not having a good year, a good week or a good day.

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. Restructuring and weak sales were blamed for the large drop.

The dismal earnings report comes a day after Best Buy named Hubert Joly, former CEO of the Carlson travel company, 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, reported AP.

Already battered by news Monday of an uncertain buyout effort and the naming of a new chief executive, the electronics retailer's stock opened down about 10 percent on Tuesday after it reported weak results overall, though the shares recovered somewhat by midday, reported the Wall Street Journal online.

Revenue dropped and the gross margin contracted sharply because of increased sales of low-margin products such as smart phones, discounts on computers, and the its efforts to lower prices to better compete with online rivals, reported Reuters.

Some say Best Buy is even losing out to the local mom & pop stores.

Overall, Best Buy earned $12 million, or 4 cents per share, in the quarter ended Aug. 4. That compares with $128 million, or 34 cents per share. Revenue declined nearly 3 percent to $10.55 billion. Adjusted earnings were 20 cents per share, missing the 31 cents per share on revenue of $10.65 billion analysts had expected, reported BusinessWeek.

Revenue at stores open at least 14 months fell 3.2 percent for the entire business, including a 1.6 percent drop in its domestic business and an 8.2 percent decline in its international division. Analysts had expected a 2.6 percent decline for the total business, reported BusinessWeek.