Best Buy suspends profit forecast as earnings decline

Struggling US electronics chain Best Buy has suspended its profit guidance for the year after a dramatic fall in earnings.

Net profits plunged to just $12m (£7.6m) on revenues of $10.6bn in the second quarter. Profits were $150m in the same period a year earlier.

Same-store sales also fell, the eighth decline in the past nine quarters.

Best Buy, which owns Carphone Warehouse, also suspended share buybacks.

Best Buy's shares, which have lost almost 70% since their peak of $56.66 in May 2006, fell further after the results.

The firm is struggling to compete with online rivals, and blamed lower expectations for sales industry-wide as well as uncertainty about the success of key product launches in the second half of the year for withdrawing its profit forecast.

Sales at stores open at least 14 months fell 3.2% in the three months to 4 August, including a 1.6% drop in the US and an 8.2% fall in international sales.

The firm said on Monday that talks with the firm's founder, Richard Schulze, over taking the company private had broken down.

Best Buy said that Mr Schulze had rejected an offer to conduct due diligence on the deal.

Mr Schulze, who owns just over a fifth of Best Buy, had wanted to buy the rest of the chain for between $24 and $26 a share.

He said he was "shocked" and "disappointed" that discussions over a possible buyout had broken up.

Best Buy has been struggling to compete with online rivals such as Amazon.

It said in June that one of its priorities was to stop its large stores simply becoming a showroom, where shoppers browse electronic products, but then buy them cheaper online.

Best Buy has seen annual declines in revenue at stores open at least a year for two of the last three years.

In March, it announced a major restructuring that included closing 50 stores, cutting 400 corporate jobs and trimming $800m in costs.