Best Buy earnings drop 77 percent, offering buyouts
The electronics retailer's third-quarter sales are down, and it offers voluntary buyouts to "nearly all" of its 4,000 employees in an attempt to curb future layoffs.
This blog was corrected at 3:35 p.m. PT to clarify the number of Best Buy employees offered buyouts.
Although Black Friday sales were better than expected, Best Buy's third-quarter earnings brought another heaping of bad news for the embattled electronics retail industry.
For the third quarter of 2008, Best Buy reported earnings Tuesday of $52 million, or 13 cents per share, on revenue of $11.5 billion. Wall Street had been anticipating earnings of 24 cents per share and revenue of $11.09 billion. It's a 77 percent drop from the same quarter a year ago, when the retailer reported earnings of $228 million, or 53 cents a share.
Best Buy CEO Brad Anderson put the industry landscape in stark terms.
"The historic slowdown in the economy and its effect on our business over the past 90 days have been the most challenging consumer environment our company has ever faced," he said in a statement. "We believe that there has been a dramatic and potentially long-lasting change in consumer behavior as people adjust to the new realities of the marketplace."
Anderson added that changes will be made to his company's cost structure. To begin with, the company is offering voluntary buyouts to "nearly all" of its 4,000 corporate employees. If buyouts are not taken, he indicated there could be layoffs.
He added that the company aims to cut capital expenditures in half, and will scale back store openings.
Best Buy is far from the only retailer struggling. Chief rival Circuit City was forced into bankruptcy and elected to close many of its stores last month, while regional electronics retailer Tweeter also this month.