Breaking Down Best Buy’s Sales Slide

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August 20 (Bloomberg) -- Bloomberg's Cory Johnson reports on Best Buy’s decline in sales. He speaks on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

We learned today that revenue from the nook unit dropped to 153 million dollars as content and device revenue took a hit.

Its overall revenue fell nine percent to $1.3 billion.

The chairman says he will not pursue his bid to buy the store.

Shares are tanking today.

Jon erlichman is in l.a. where he just got off the phone with michael hughes.

What did he have to say?

There are so many questions about what is going to happen with the nook business.

That is in part because of competition.

As you highlighted, what was confusing today was that a couple of months ago william lynch put this idea out there that independently building these devices might not make sense.

Going out and finding a manufacturer could be helpful from a financial perspective.

Here are some the comments he made on a conference call this morning.

Some kind of outsourcing is neither appropriate or smart for the company.

We have announced ban the group of people that are a small part of our expense.

They do a tremendous job and do not deserve to have their jobs outsourced.

In our phone conversation, he highlighted a couple of things.

The idea about independently building them might be misleading because they have a lot of orders that are helping them build these devices.

He also said the big issue was they made too many.

They got the numbers wrong on the demand.

Specifically highlighted the ipad mini.

The other was that the devices are for a reading audience.

They do not like to use the word tablet.

I like to see them as readers.

That is the market.

What a bart the did -- what about the decision not to go after retail stores?

Did he have anything to say?

It is fascinating.

As chairman, he is aware of what is going on.

What huseby, he found out exactly what his plan was.

When it comes to actually separating these businesses, he says we have prepared to go down that road.

We have taken the steps to do that.

Where we looked at all of the options, financially it sounds, based on what he said, they have not found something that makes sense.

Whether it was a spinoff or somebody interested in buying the business.

The numbers are not adding up.

Microsoft is an investor in nook.

I asked him about that.

We are supposed to look at microsoft as a partner for now.

Obviously this was important for microsoft to get more digital content available.

That is something they continue to do as an investor . they are providing financial assistance to the growth of that business.

Obviously a lot of people are speculating about what could happen with microsoft.

You would think if they looked at all of the options, maybe microsoft likes what it is doing and nothing more than that.

All right.

Jon erlichman, thank you.

Barnes and noble is far from the only retailer struggling to adjust to technology.

Best buy also reported earnings today after cutting prices, jobs, and cost.

Its biggest prophet but sales fell to $9.3 billion.

Same-store sales also fell even though it has the peak stores -- boutique stores.

Jon erlichman -- maybe the headline should be best ball made nine point 3 -- best buy made 9.3 billion dollars.

I think this is an interesting story.

Not just because it is hard what they're trying to do but it is a symbol for a lot of company struggling to do with a new era of technology, amazon, walmart building the largest.

We look at the company, the stock has rebounded quite a bit after last year.

And discussions of takeover, 180 five percent year to date.

We have seen a turnaround not just in the stock but sales over the long term, we have seen things get a lot worse for this company.

I had to face a new reality with online shopping.

-- they had to face a new reality with online shopping.

But i think when you look at this company, all things are better this quarter, i am also excited today.

We have to look at the long-term sales.

They did -- they continue to decline, as you mentioned, $9.3 billion in revenue.

Obviously fourth quarter is a big deal from them.

You can see $17 billion in the fourth quarter.

Most importantly the profits return.

It is a welcome return.

A lot of the one-time charges are behind them.

You can see a trend starting to emerge for this company.

Profits are really improving dramatically.

What was so different compared to last quarter?

I think the big thing you see, you are still just starting to it, cutting overhead.

They are really cutting their fixed costs, they are changing the way stores operate in they are looking specifically at cutting those numbers that were well over $2 billion -- what are we talking about?

Staff, training, returns.

Returns are a big deal.

They are spending hundreds of million dollars every year in managing damaged goods and returns.

Managing the supply chain letter is a big deal.

Also getting their product right.

You referred to the stores, part of that is training people to sell computers.

They do 30% of the pc business in the u.s. it is one of the biggest.

Samsung taking a major presence in the stores.

Those numbers did not include any releases from samsung and apple.

They have been in a fitting more in the fourth quarter.

Did samsung help?

Samsung is going to draw attention.

What they can do because apple is going to look like what they are -- look at what they're doing.

One of the changes is music.

The cd business is dying.

But selling cds and video games has been important for best buy for a long time.

They are taking all of that retail space and get rid -- getting rid of the cds and the selling mobile phones.

That has been a turnaround for these guys.

They're not filling with stuff that just sit there.

It is a change for baseball -- best buy.

You wonder what took them so long.

They had a lot of inventory of cds.

The management could not figure out what to do with the cd business they were used to.

It was probably hard for them to jettison that.

I am sure that is the way they looked at it.

Another one we will be watching.

The cory johnson, thank you.

As jeff bezos gets into the newspaper business, the "san francisco chronicle" decides to pull down its pay wall.

We have phil bronstein with us next.

You can also watch is streaming at bloomberg.com.

? welcome back to "bloomberg west." al jazeera america launches in the united states today.

The network will initially be available in 40 million households.

The network president joined us earlier today.

Take a listen to what she had to say.

It is not the number of outlets, it is the quality of the news you're getting.

Many of the cable channels have a particular be nt, conservative, liberal, many of them have a particular area like yours, financial news.

This text has been automatically generated. It may not be 100% accurate.

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