Liberal socialist utopias such as California are a blessing for deadbeat klepto hobos from around the world thanks to the state’s lack of prosecution of shoplifting, but the same policies are becoming a major headache for nationwide retailers such as Best Buy which this morning reported that despite beating on the top and bottom line (revenues of $11.9 billion vs expectations of $11.7BN, EPS of $2.08, beating est of $1.96), its margins missed, echoing the same margin crunch theme that emerged recently with big box retailers such as Walmart.
Gross margin fell 0.1% to 23.5%, Best Buy said, missing the 23.6% average of analyst estimates compiled by Bloomberg, while the decline in the core U.S. operation was steeper. The company also reported a 10% drop in domestic online revenue as more shoppers returned to stores.
But besides the usual margin-crushing suspects of frayed supply chains and deep discounts as a result of stepped-up promotional activity and a drag tied to its new TotalTech membership program, the company brought up the reason why Democrats are looking at far more losses in the coming months as a reason for the margin drop: organized theft.
“We are seeing more and more particularly organized retail crime,” Chief Executive Officer Corie Barry said on a conference call with analysts. “You can see that pressure in our financials, and more importantly, frankly, you can see that pressure with our associates. It’s traumatizing.”
Best Buy’s unexpected struggle to shore up gross margin comes after the recent stock surge boosted Wall Street’s expectations. That’s why today’s sharp return to reality sent BBY shares plunging as much as 17% to $115.01 in New York trading — the biggest intraday plunge since the covid crash on March 18, 2020.
Hilariously, Best Buy had advanced 38% this year through Monday, attaining record levels and outpacing the 28% gain of an S&P 500 index of consumer discretionary companies. Because while BBY channel checkers were right and traffic was indeed off the charts; alas most of that foot was courtesy of thieves.
Reprinted with permission from Zero Hedge.