Best Buy’s Worst Buy: a Horrifying Statistic

How bad are things at Best Buy (BBY)? Here’s how bad: the company has spent more buying its own shares than it’s now worth.

This observation comes from Minyanville editor Michael Comeau, who tweeted that Best Buy has spent $6.4 billion on buybacks since 2008.

BBY Stock Buybacks Chart

BBY Stock Buybacks data by YCharts

But it’s worth about $300 million less than that now.

BBY Market Cap Chart

BBY Market Cap data by YCharts

Stock buybacks are supposed to cause share prices to go up, or at least that’s the idea. There are fewer shares outstanding, so there are fewer owners to share the earnings.

Unfortunately, that has not been the case for Best Buy, and the rout continues. The company announced a new chief executive, a brave man named Hubert Joly who comes from hospitality, not retail, and had to explain to the StarTribune, “I’m not suicidal.” Meanwhile Best Buy reported second-quarter earnings that were even worse than expected. Net earnings were $12 million, down from $150 million last year. Domestic same-store sales fell 1.6% versus the year-ago quarter’s 14% gain. Amazon (AMZN) is murdering Best Buy.

Best Buy also announced that it had repurchased another 6.3 million shares last quarter for an average price of $19.28.

BBY Chart

BBY data by YCharts

“The company has suspended its share repurchases for fiscal 2013 as it goes through the transition to a new CEO,” it reported.

That may be the only good news. Richard Schultze’s buyout offer, which YCharts said to take, is looking better and better.

From the editors of YCharts.YCharts Pro Investor Service includes professional stock charts, stock ratings and portfolio strategies.



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