Published in News

Best Buy expects less profit than forecast

by on12 January 2009

Image

Employee buy-out charge to cost $60 million

As we told you previously, Best Buy plans to reduce their work force through aggressive employee buy-outs. It has now been revealed that the company will take a $60 million fourth quarter charge to cover the cost of these buy-outs.

In addition to the announcement of the buy-out charge, the company also is narrowing its forecast for fiscal 2009 profits. The company now expects to see a projected profit of about $2.50 to $2.70 per share, which was initially pegged at between $2.30 to $2.90 per share. Many analysts are predicting that Best Buy will come in at about $2.61 per share when all of the math is done.

The company will need to continue to control costs as they continue to feel the effect of the economic downturn in the U.S. and that of consumers holding on to their money. While the company did have some strong sales for the holiday in some stores, many other stores did not do as well as expected.

Many analysts continue to predict that the price of consumer electronics will continue to fall due to the economic downturn in the U.S., which could make Best Buy struggle even more. Still the company is in a better position than rival, Circuit City, who recently announced that they are in talks with interested parties that could either pump cash into the company or buy the business.
Last modified on 12 January 2009
Rate this item
(0 votes)