Shares of Best Buy (NYSE:BBY) have gone down to its lowest level in nine years even as the positive quarterly results of Urban Outfitters (NASDAQ:URBN) has allowed the company to go up significantly as it outpaced all gainers in the retail sector.
Shares of Best Buy went down to around $16.25 before closing at $17.91 or 1.38 percent lower than the previous close. The drop follows the reported 90 percent drop in second quarter profits. The drop in the profits resulted to a suspension in the current forecast of the company as it indicated that it will not offer another outlook.
According to David Strasser of Janney Capital Markets, discussions were made on the possibility that the structural problems were overstated and the main reason for the current situation is a weakness in the product cycle. He added that the international may be re-evaluated if a new chief executive comes in to investigate further into the strategic plans of the company.
Hubert Joly was named the new president and CEO of Best Buy by the board of the company. The track record of Joly in leading turnarounds has contributed to hiring him. The efforts of Richard Schulze, the founder of Best Buy, in making the company private did not prosper during the weekend.
Schulze reportedly revealed his disappointment on the sudden public termination of his private discussions with the board of the company. He thought that the agreement was nearly finalized but the discussions were ended as the board announced the hiring of Joly.
Shares of Best Buy have gone down by 23 percent since the start of the year and are nearly down by 26 percent in the last twelve months.
In contrast to Best Buy’s fortunes, Urban Outfitters shares reached their highest level in 52 weeks as it hit $37.65 before closing at $36.88 on Tuesday. The company led gainers in the retail sector at the S&P 500 throughout the entire session.
In addition to operating the Urban Outfitters store, the company also operates two other brands, Free People and Anthropologie. Second quarter earnings reported by the company exceeded projections of analysts by $0.09, as its revenue and profit increased by 11 percent and 8 percent respectively compared to the same period last year.
Sales for Free People increased by 12 percent while Urban Outfitters sales increased by 6 percent. In contrast sales of Anthropologie did not budge at all. Share prices of Urban Outfitters have increased by 34 percent since the start of the year and 42.5 percent since last year.