US consumer electronics retail giant Best Buy has slashed its earnings outlook for 2009, following news earlier this week that Circuit City, its rival, had filed for bankruptcy protection.
The company has said that it expects earnings per share to hit between USD 2.30 and USD 2.90, instead of the previously estimated USD 3.25-3.40 range, while revenue should sit somewhere between USD 43.7 billion and USD 45.5 billion.
"Rapid, seismic changes in consumer behavior have created the most difficult climate we've ever seen," commented the company's CEO Brad Anderson, according to Forbes. "Best Buy simply can't adjust fast enough to maintain our earnings momentum for this year."
Investors expressed surprised by the scope of the forecast cuts, and now expect the retailer to try to lure shoppers with significant discounts.
"It's big news for consumers," said Brady Lemos of Morningstar. "I think they'll want to sell as much as possible," while Daniel Binder of Jeffries & Co added: "The fact that they had to lower numbers should not have been a huge surprise, but the range the company provided was."
Best Buy's share price dropped by 8 per cent over the day to end at USD 21.97.