Best Buy Saying Holidays Shopping "Down 5% to 15%"

Just in case eanyone thought the holidays might bail out retailers like Taget (NYSE:TGT) and Best Buy (NYSE:BBY), think again.

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,” said Brad Anderson, vice chairman and chief executive officer of Best Buy. “We’re beginning to adjust our cost structure to restore earnings momentum and still gain market share. We firmly believe that our strategy of customer centricity is of great value in driving our performance versus the industry, and that’s the strategy we plan to pursue to continue to strengthen our position in the marketplace.”

The company’s total comparable store sales declined by approximately 7.6 percent for fiscal October, following a modest comparable store sales decline for fiscal September. The following table summarizes recent comparable store sales performance.

As significant changes in the consumer environment and competitive landscape make it very difficult to project revenue trends, the company is providing a wider range of guidance. Specifically, the company anticipates that comparable store sales for the four months remaining in fiscal 2009 (November 2008 through February 2009) could decline by 5 percent to 15 percent, resulting in an annual comparable store sales decline of 1 percent to 8 percent. The stronger U.S. dollar also is expected to result in lower revenue and profits from the company’s international segment than previously expected. Factoring in year-to-date results, the high end of the company’s revenue range now includes annual revenue of $45.5 billion (including Best Buy Europe), an annual comparable store sales decline of approximately 1 percent, and annual earnings per diluted share guidance of approximately $2.90. The low end of the company’s revenue range includes annual revenue of $43.7 billion, an annual comparable store sales decline of approximately 8 percent, and annual diluted EPS guidance of approximately $2.30. The midpoint of the new earnings range represents a decline of approximately 17 percent compared with diluted EPS of $3.12 for fiscal 2008, and it assumes that revenue for the balance of the year is generally consistent with the company’s October comparable store sales decline of 8 percent.

Brian Dunn, president and chief operating officer, said, “In 42 years of retailing, we’ve never seen such difficult times for the consumer. People are making dramatic changes in how much they spend, and we’re not immune from those forces. That’s why it’s critical that we manage our spending, while preserving key growth initiatives. Having said that, we believe that our strategic indicators remain strong. We continue to see improvements in employee turnover, customer satisfaction and market share – and our commitment to our strategy of customer centricity is unwavering. In fact, given recent announcements by competitors, we believe we have even greater potential to serve new customers and to capture market share in the months and years ahead.”

The company previously had provided earnings guidance of $3.25 to $3.40 per share for fiscal 2009, including an annual comparable store sales gain of approximately 2 to 3 percent. The average analyst estimate of Best Buy’s fiscal 2009 earnings on First Call on Nov. 10 was $3.03 per diluted share.

All this also means the banks providing DIP financing for Circuit City (NYSE:CC) are fools and are going to regret making the decisionas the appears to be no impetus for the business to survuve at all going forward.

Aside from Wal-Mart (NYSE:WMT), Wall St. Nation readers might want to avoid retail stocks until next year.