Best Buy to Shareholders: Brace Yourselves for This
Best Buy (NYSE:BBY) sounded a warning Thursday for investors to brace themselves for the company’s third-quarter earnings results, which the electronics retailer cautioned would show profits falling ‘significantly’ below last year’s mark.
Desperate to speed up a comeback and kick-start slumping sales, newly-named Chief Executive Officer Hubert Joly placed himself in charge of U.S. operations and eliminated two senior executive positions. However, Best Buy faces a difficult road ahead.
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“We see limited opportunity for a turnaround in sales and think gross margins will compress from an attempt to be more competitive in the fourth quarter,” said Standard & Poor’s analyst Ian Gordon.
Aside from struggling to boost sales, Best Buy has another matter on its plate with which it must contend. Founder and former chairman Richard Schulze is aggressively pursuing a buyout of the company he once helped build.
Schulze, who received permission in August to do his due diligence and present Best Buy shareholders with a purchasing offer within 60 days, is aiming to buy the company and take it private, a proposal shareholders seem to be resisting. On August 6, Schulze made an offer to buy at $24 to $26 per share.
Shares in Best Buy closed at $15.17 per share Thursday, down 10.34 percent, and are down another 1.81% trading at $14.90 per share on Friday.