These are not Best Buy Co., Inc. (NYSE:BBY)’s best days. Today the stock dove 10 percent in midday trading. The stock tremors come after the company announced that its management was undergoing changes and predicted lower than expected third quarter earnings. As the announcement came yesterday, Best Buy Co., Inc. (NYSE:BBY) shares fell more than 7 percent in after hours trading.
Two key executives are leaving the management, including the US President, Mike Vitelli, who will retire by Feb 2013, and executive vice president of US operations, Tim Sheehan will retire by the end of October. Vitelli is being removed from the company as part of a “thinning of upper management”, Hubert Joly, CEO of Best Buy Co., Inc. (NYSE:BBY), said on Wednesday. Shawn Score, a 27 year veteran, will now supervise all of the US operations.
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“Our new organization will help build a closer connection to our customers and front line employees, as well as accelerate our transformation,” Mr. Joly said.
Best Buy Co., Inc. (NYSE:BBY) is still the largest seller of electronics globally, with $50 billion in sales, but is struggling to overthrow competition from online sellers like Amazon.com, Inc. (NASDAQ:AMZN). Earlier this year, Best Buy Co., Inc. (NYSE:BBY) shut down 50 large stores. Radioshack Corporation (NYSE:RSH), another leading electronics seller of the past, is also surrounded by similar problems. The revenues and gross margins declined in Q3, and earnings were lower than Wall Street expectations.
Sales at Best Buy have been suffering from a slowdown because of increasing market dominanceof its competitor, Amazon (NASDAQ:AMZN). The electronics retailer is not roping in much revenue, as the customers go to Best Buy for window shopping and testing of products, but do their actual buying at Amazon.com, Inc. (NASDAQ:AMZN) and Wal-Mart Stores, Inc. (NYSE:WMT).
Best Buy Co., Inc. (NYSE:BBY) said on Wednesday that third quarter earnings will continue to decline, as they have in the last two quarters of FY2012. The new guidance predicts a profit drop of at least 10 percent.
Amazon is announcing its quarterly earnings after the markets close today.