Best Buy, the biggest US consumer electricals retailer, cut its 2008 earnings outlook after suffering from weak January Sales.
The store group blamed a drop in customer traffic on the “challenging” economic environment in the US. Best Buy now expects sales to rise 2.5 to 3 per cent during the financial year to March 1, compared with earlier expectations of a 4 per cent gain.
Total revenue is expected to reach about US$40 billion (£20.5 billion), after sales of flatscreen TVs and home theatre equipment, MP3 players and video games were hit badly.
Best Buy chief finance officer Jim Muehlbauer insisted that the retailer would push ahead with its worldwide expansion plans, despite the lacklustre domestic performance.
The company is in the process of opening in Canada and China. It also plans to launch in Mexico and Turkey in 2009.
“Our optimism and point of view about the future has not changed and we continue to operate our business with a long-term perspective,” said Muehlbauer. “That perspective guides our decision to continue expanding our footprint globally with new stores.”
However, the weak showing upset has cast doubt on speculation that it would make a bid for Carphone Warehouse, in which it has a 3 per cent stake.
Pali International analyst Nick Bubb said: “Talk of a takeover was bit far-fetched to begin with. Charles Dunstone has never given the sense he was interested in that for one thing. With Best Buy’s January trading being so disappointing and its share price coming under pressure, I think it unlikely.
“The US economy is in a poor state and it makes sense that electricals retailers will be affected by that. This announcement is sure evidence of the continuing slowdown.”
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