Best Buy Boosts Consumer Lack of Confidence Index
No one is immune to the econalypse. Not even “Specialty Retailer of the Decade” Best Buy. The company today joined the sad conga line of retailers lamenting the recent turmoil in the financial markets. Citing continued weakness in consumer spending, the company slashed its fiscal 2009 profit forecast. Best Buy (BBY) had been expecting earnings for the year to be between $3.25 to $3.40 based on a same-store sales increase of two to three percent for the year. It now expects them to be between $2.30 and $2.90 a share on sales of between $43.7 billion and $45.5 billion. Ugly.
And here we are on the cusp of the crucial holiday selling season.
“Since mid-September, rapid, seismic changes in consumer behavior have created the most difficult climate we’ve ever seen,” Best Buy CEO Brad Anderson said in a statement. “Best Buy simply can’t adjust fast enough to maintain our earnings momentum for this year.”
Can’t say that’s all that surprising to hear given recent signs. In late October, eMusic, the digital music subscription service, sacked about 10 percent of its staff, citing slowing sales at retail partners like Best Buy. Then earlier this week, Circuit City (CC) filed for bankruptcy, complaining that “over the past several months, consumers have been unable to borrow funds through credit cards, let alone home equity loans, to purchase household and other electronics products.” And now, economists are saying October retail sales in states may have fallen more than two percent–their steepest decline since 2001. Said Avery Shenfeld, an economist for CIBC World Markets, “October will prove to be a disaster for retail sales, with only the discounters having anything to cheer about.”
And don’t even bother asking about November….