Best Buy Q2 profits plummet 91 pct.

Best Buy
Best Buy store in West St. Paul, Minn.
MPR Photo/Nikki Tundel

A new earnings report shows just how big a job Best Buy's new CEO Hubert Joly has on his hands to turn around the company's flagging fortunes.

The Richfield-based electronics retailer's net income for the quarter ending earlier this month fell a whopping 91 percent to just $12 million. That's down from about $130 million for the comparable period a year ago.

Interim CEO Mike Mikan said Best Buy remains in a turnaround mode.

"The company continues to face significant challenges," Mikan said. "Markets in China and Europe are facing enormous difficulties. And that has had a negative impact on us. In the U.S., economic condition are soft and will probably remain so for the indefinite future. Consumers remain very cautious."

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Without costs related to store closures and other restructuring efforts, the bottom line would have been $68 million. But that's still a steep drop.

Sales at U.S. stores open at least 14 months fell about 2 percent. The drop was driven by declines in gaming, digital imaging, televisions, notebook computers and mobile phones.

The company signaled its difficulty by reducing its earnings expectations for the year and stopping a program to repurchase stock. Its cash on hand also dropped by two-thirds.

Best Buy shares opened down 10 percent Tuesday but have regained much of that loss.