Electronics retail chain Best Buy reported dismal results in its fiscal 2013 Q2 earnings report today, with profits taking a 91 percent nose dive.
The poor earnings caused Best Buy’s stock to reach a nine-year low — dropping as far as $16.23 per share during morning trading. However, the stock decline first started with yesterday’s announcement of new Chief Executive Hubert Joly, former head of hotel and restaurant company Carlson Cos. And while Joly does have a background in tech (he also previously ran Vivendi Universal as well as IT company Electronic Data Systems), his appointment as CEO caused investors to lose even more confidence after today’s earnings.
Revenue dropped 3 percent to $10.5 billion overall for the company, with the majority of losses coming from international store sales in China and Canada. The only significant point of growth for Best Buy was in online sales, which isn’t surprising considering that Amazon and other online retailers are somewhat responsible for declines in the brick and mortar stores.
The stock dropping to record lows is even more significant because of a rumored offer from Best Buy founder Richard Schulze to take the electronics chain company private.
Schulze, who stepped down as Best Buy’s chairman earlier in the year, currently owns 20 percent of Best Buy stock and is offering others $24 to $26 per share to do this. His offer is over 30 percent higher than the stock’s current price of $17-$18 per share, effectively valuing the company at $8.5 billion.
Considering the radical changes that Best Buy will need to stay competitive (not to mention profitable) over the next few years, a buyout option from Schulze seems like an even better deal for investors.