Best Buy shocked the market yesterday when it said it was lowering guidance for the holiday season and called the current environment “the most difficult climate we’ve ever seen.” It’s still unclear whether the company will scale back any of its growth plans, including its aggressive push into mobile. The company’s COO Brian Dunn said that while Best Buy needs to manage costs, it is still “preserving key growth initiatives.” So, the big question is whether the retailers undertaking in mobile qualifies as a key growth initiative? Last month, details were released on the two-pronged approach, which includes opening several standalone mobile stores in U.S. and a massive five-year plan in Europe that will cost about $154 million, and consist of building at least five big-box Best Buy Europe stores through its joint venture with Carphone Warehouse.
Still, the big-box retailer did not sugarcoat the news. Best Buy’s vice chairman and CEO Brad Anderson said in a release that, “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. We’re beginning to adjust our cost structure to restore earnings momentum and still gain market share.” Release.
Photo Credit: Studio Mohawk