Why Best Buy Shares Fell

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Investors were tossing aside shares of Best Buy (NYS: BBY) yet again today, as the big box retailer fell 10% on an earnings warning and a reshuffle at the executive level.

So what: Management said same-store sales and overall revenue would continue to decline in the third quarter by a similar pace as the first half of the year, about 3% to 5%, and the company also jettisoned two senior executives in a move to streamline operations. CEO Hubert Joly said, "One thing I have learned in helping turn companies around is that a business needs to have a nimble organization," adding that the change will improve communication with customers and front-line employees. and speed its transformation efforts.


Now what: Things have gone from bad to worse for the electronic retailer, as management gaffes have made an already weak competitive position even tougher. Competition from Amazon.com (NAS: AMZN) has been undermining the bricks-and-mortar retailer, which looks far from finding a silver bullet to save itself. Perhaps the only thing investors can count on at this point is the buyout offer from Founder Richard Schulze. who offered to take it private for $24 to $26 a share. Operationally, there seems little reason to believe in a comeback.

Best Buy shares seem to just keep going lower, but rival Amazon just goes up and up. Find out if Amazon is still a good buy in our new ticker report, which details opportunities, risks, and key areas to watch. You can get your copy by clicking here now.

The article Why Best Buy Shares Fell originally appeared on Fool.com.

Jeremy Bowman has no positions in the stocks mentioned above. The Motley Fool owns shares of Amazon.com and Best Buy. Motley Fool newsletter services recommend Amazon.com and Best Buy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners