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Best Buy posts meager profit for Q2, suspending earnings forecasts as new CEO steps up

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Best Buy says it will not be providing guidance for the fiscal year after posting $10.5 billion in revenue and $12 million in net income.

Best Buy store nyc (STOCK)
Best Buy store nyc (STOCK)

Retail giant Best Buy has suspended its earnings forecast after lackluster second quarter results. The company, which has been struggling to adapt to a market dominated by online sellers, posted revenue of about $10.5 billion, down from $10.9 billion at the same time in 2011. Unlike in March, though, where restructuring costs and a share buyout from Carphone Warehouse led to a $1.7 billion loss, Best Buy saw $12 million in net income this time, still a painful decline from the same time last year, but a less striking one. As before, restructuring costs ate up some of the gross profit.

In the US, Best Buy revealed that it has reduced its "big box" square footage by 4 percent compared to last year, a number that is likely to increase as it continues with its plan to close 50 or more US stores. Domestic and international sales still declined, but domestic store sales dropped less than they did in the first quarter, and weak areas like television and notebooks declined less than before. Even so, these sales reductions were apparently more than enough to offset growth in things like phones and tablets.Buyout proposal for founder Richard Shulze 'still stands'

On a conference call, Best Buy's interim CEO stressed that these declines were "expected," and that product launches like Windows 8 could drive sales later in 2012, but the company has still lowered its earnings expectations for the whole year. A new CEO, named yesterday, will also apparently be given "flexibility" to create a new strategy, contributing to the decision to suspend forecasting.

Best Buy was also asked to address a prospective takeover by founder Richard Schulze. The company had previously said its offer to begin evaluating the buyout process had been declined, something Schulze's team reportedly disputed. Now, Best Buy's board says that "our proposal still stands. We feel it's up to Dick to respond from there." It's not entirely clear what's going on, but this suggests that talks will continue.