Best Buy has lowered its guidance for the fiscal year due to falling consumer spending, driven by ‘the recent turmoil in the financial markets and other macro economic factors’.
"Since mid-September, rapid, seismic changes in consumer behavior have created the most difficult climate we've ever seen. Best Buy simply can't adjust fast enough to maintain our earnings momentum for this year," said Brad Anderson, vice chairman and chief executive officer of Best Buy.
"We're beginning to adjust our cost structure to restore earnings momentum and still gain market share. We firmly believe that our strategy of customer centricity is of great value in driving our performance versus the industry, and that's the strategy we plan to pursue to continue to strengthen our position in the marketplace."
The company's total comparable store sales declined by approximately 7.6 per cent in October, following a modest comparable store sales decline for fiscal September.
Anderson added, "We can't change the overall level of consumer spending, but we can focus on deepening our relationships with customers wherever we interact with them: in our stores, on our Web sites and through our call centres. We do that through our execution, the engagement of our employees, and the quality of our products and services."
The company now anticipates that comparable store sales for the four months remaining in fiscal 2009 (November 2008 through February 2009) could decline by five per cent to 15 percent, resulting in an annual comparable store sales decline of one to eight per cent.
Factoring in year-to-date results, the high end of the company's revenue range now includes annual revenue of $45.5 billion (including Best Buy Europe), an annual comparable store sales decline of approximately one percent, and annual earnings per diluted share guidance of approximately $2.90.
Brian Dunn, president and chief operating officer, said, "In 42 years of retailing, we've never seen such difficult times for the consumer. People are making dramatic changes in how much they spend, and we're not immune from those forces. That's why it's critical that we manage our spending, while preserving key growth initiatives.
“Having said that, we believe that our strategic indicators remain strong. We continue to see improvements in employee turnover, customer satisfaction and market share -- and our commitment to our strategy of customer centricity is unwavering. In fact, given recent announcements by competitors, we believe we have even greater potential to serve new customers and to capture market share in the months and years ahead."