Troubled home entertainment retailer Best Buy said it does not intend to further provide or update earnings guidance for fiscal 2013, the company told investors during a conference call yesterday to discuss its second-quarter earnings.
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The announcement came a day after Best Buy announced Hubert Joly, CEO of hospitality and travel company Carlson, would replace interim CEO G. Mike Mikan as the company’s president and CEO in September.
In a press release, Best Buy said Joly’s arrival is one reason the company will not provide or update its earnings guidance. The company also said it has reduced its earnings expectations based on lower expectations for industry-wide sales and the “uncertainty associated with several key product launches expected in the second half of fiscal 2013.”
Bloomberg reports Joly will earn at least $9.6 million in 2014 and comes in with a base salary of $1.175 million.
Though Best Buy billed Joly as a turnaround specialist, Joly’s LinkedIn profile indicates he’d been with Carlson and its subsidiaries for the past four years, and served as CEO of video game company Vivendi Universal from 1999 to 2001.
Michael Pachter, managing director with Wedbush Securities, wrote in a report that he thinks Joly is the wrong choice for Best Buy.
Minneapolis Star-Tribune pulled this quote from Pachter’s report: “We find Mr. Joly’s resume unimpressive. He lacks sufficient experience to engineer a turnaround at Best Buy.”
Forbes contributor Walter Loeb wrote that he believes Best Buy is in turmoil, and questions its ability to survive.
“As I look back to Circuit City’s demise, I have to wonder if Best Buy can survive in its present form,” Loeb wrote.
Loeb added that Amazon, eBay, Walmart and other online discounters have targeted the electronic sector as a loss leader department. He also noted that Walmart just announced a special layaway program for electronics until Christmas.
On Sunday, Best Buy’s board also announced it had rejected company founder Richard Schulze’s offerto buy it and take it private.
On Aug. 6, Schulze made an offer of about $8.8 billion to acquire Best Buy. Steve Gandel of CNN Money wrote that day that the deal is intriguing, but the chances of anyone lending Schulze that kind of money is far-fetched.
Wedbush Securities managing director Michael Pachter explains why he thinks Best Buy has no chance of a turn around. He speaks with Emily Chang on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)