Electronics retailer Best Buy has already been on the ropes because of recent earnings disappointments and deep concerns about future quarters. It turns out that concerns were well founded. Best Buy announced it would get badly beaten, primarily because of inflation. A recession will not help.
The worst of its new forecast is that full-year same-store sales will drop 11% compared with previous forecasts of a 3% to 6% drop for the next fiscal year. Best Buy will end share buybacks, but will keep its quarterly dividend intact at $0.88 per share. It is cold comfort.
Corie Barry, Best Buy CEO, made a curious statement. “While our financial results are not where we expected them to be this year, our sales continue to be higher than they were pre-pandemic.” Given how badly the COVID-19 pandemic crippled brick-and-mortar retail sales one would hope so.
Best Buy continues to show it cannot accurately predict its future. The problem has been based on unfounded optimism. Investors can only hope the latest figures are right. Best Buy said it would provide investors more details when it releases earnings on Aug. 30. Hopefully, these will not include an even worse forecast.
Best Buy’s shares have already fallen 27% this year. The announcement will drop them even more.
The news begs one more question. CEO Barry has held her job since June 2019. The members of Best Buy’s board have to be asking themselves how long poor results and inaccurate forecasts can go on. Shareholders deserve better.
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