Best Buy can't go on like this
The retailer's earnings are even more dismal than Wall Street had feared. Shares tumble 12%.
The headline on the company's earnings release today says it all: "Best Buy Confirms Significant Decline in Fiscal Third Quarter 2013 Earnings."
Shares of Best Buy, which have slumped more than 48% this year, not surprisingly plunged 12% in early trading Tuesday.
CEO Hubert Joly, who was named to the job in August, seems to have a firm grasp on the retailer's many problems which, to his credit, he isn't sugar-coating. In fact, he is quoted in the release as describing the company's financial performance as "clearly unsatisfactory." His candor is no doubt welcome by Best Buy's beleaguered investors.
But the odds of Joly succeeding are slim. In an interview with Bloomberg News, he lamented the fact that Best Buy lacked the connection with consumers that Apple (AAPL) and Amazon (AMZN) seem to enjoy. He also is trying to boost the company's lackluster online sales by vowing to match prices of Amazon and other rivals. It's a risky strategy, but given Best Buy's precarious state, one that Joly has little choice but to follow.
Unfortunately, the retailer is being forced to increasingly compete on price instead of service. There is so much information available to consumers online that many don't need a Best But expert clothed in a blue golf shirt to advise them on what to purchase. Best Buy's stores are also cavernous and often crowded on the weekends, which makes them unpleasant places to shop. Many of the people that you see in the stores are "show-rooming" -- checking out products in the company's bricks-and-mortar stores that they will later buy online at a much cheaper price. That is a growing problem.
Time is not on Best Buy's side, particularly as it heads into the important holiday season. Wall Street will want to see some signs of improvement, tiny as they may be, or else Joly's job could be in jeopardy. Schulze and his partners will also demand better performance if they are able to finalize their plans to make an offer. If that happens, the founder should keep Joly as CEO because he seems to have a firm grasp on the retailer's problems. All Joly needs is the time -- and money -- to fix them, which is easier said than done.
Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter@jdberr.
The experience at a Best Buy is awful. I can never find anyone to help. The only people that ever come up to ask if I need anything are DirectTV salespeople soliciting their satellite service. Which is incredibly annoying. I'm here to look at a new computer, not completely rework my cable at home. Every time I go to a Best Buy, I'm usually accosted by at least two people soliciting DirectTV to me, while actual employees who can help me with what I'm actually shopping for are nowhere to be found.
I would have shopped at Best Buy over th years if they had not made returns and exchanges so grueling and difficult. Would be willing to pay a little more than online shopping if exchanges and returns were not so hard and time consuming. They planned it that way, so I only shopped there for items that I knew up front that I would not return. I can't be the only person that figured that out, and Best Buy created that customer service monster. Have compassion for the employees that will lose their jobs but poor customer service wont survive in retail.
Here is the problem Best Buy. I will give you free advice! LOWER YOUR PRICES!!!! See that was simple enough. While your doors are slowly closing, your prices remain the highest in the market. Why would I buy a TV from you when I can go a block down the street to Wal-Mart and purchase the same TV for $200 cheaper? Why would I buy a flash drive for $50 when I can get it on Amazon for $15? Its simple math here. Stop stuffing your pockets with cash while my pockets are a little tighter now. There ya go. I just saved your business!
The last time I made a purchase at Best Buy was a year ago and I swore then that I would never return to their stores. What should have taken me 5-10 minutes tops turned into forty minutes. All I wanted was a Kindle Fire. I had researched it and knew that it was for me. All the clerk had to do was to unlock the cabinet and I would go to the register and be on my way. Oh no, she had to put my name on the list on her clip board to speak to another clerk. I knew right away that it was just a ploy to get me to listen to the sales pitch for the extended warranty contract. After twenty-five minutes of waiting, I was correct. It then took the clerk another ten minutes to figure out how to write up the sale and get the computer to accept.
Never again, Worst Buy! May you go the way of the Dodo Bird!
1) Silently store by store running off its most productive employees in favor of "cheaper" labor
2) Keeping the corporate porkers: ones responsible for brilliant (moronic) ideas
3) Implementing tracking sheets turning employees into high pressure salespeople like I tried to tell a know it all district manger, "....wrong economic environment to use tracking sheets....you WILL lose as many customers as you make with these..."
4) Internal corruption: promotion through who you know NOT what you know
5) Stupid sales "scripts" every salesperson is required to use on the customer to sell more products/services driving away customers
6) Some put in general manger positions who could not even run a paper route relying on others/store location to prop them up
Who am I??....WAS a "special" employee @ store# 221-558955. To those mangers who thought you knew more than me...you took a company I once loved and you helped destroyed it. I like how there was to be an internal investigation of Mr.Dunn...like the Mafia performing its own internal investigation based upon rumors of organized crime LOL!
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