Shares of electronics retailer Best Buy’s stock fell 5% Monday after it was reported that CEO Hubert Joly cut his stake in the company by 44%.
Joly sold 398,000 shares worth some $12.8 million, leaving him with $16.3 million in common stock and about $24 million worth of stock options and performance shares, according to a filing with the Securities and Exchange Commission.
Best Buy spokesperson Jeffrey Shelman said Monday that Joly's action is "solely related to his desire to diversify his overall personal holdings" and not any plans to step down, Reuters reports.
There are a host of reasons an executive might sell shares in a company, including, as Best Buy’s spokesperson says, a simple matter of adjusting a personal portfolio. But any time a CEO sells shares in the company he runs, it’s often seen as an apparent acknowledgement that not all is well for the foreseeable future.
Best Buy announced in May that it is working to beef up its customer service by expanding store associate training and enhancing its Geek Squad tech support team. Joly told Fortune then that the company is in a unique position to help customers make sense of an increasingly complex technological scene.
“The pace of innovation (in tech) is very extraordinary but for the customers it’s a bit confusing knowing what to buy,” Joly said Tuesday. “There is a growing gap between what technology can do and what we as consumers understand what technology can do.”
Best Buy managed to beat expectations for its recent first quarter results, reporting earnings of $229 million, compared to its year-ago earnings of $129 million. Adjusted earnings were 44 cents per share, well past estimates from Zacks Investment Research for 35 cents per share. Same-store sales in the quarter fell just 0.1%, against Best Buy's own expectations of a 1% to 2% decline, buoyed by online sales, which grew 24% in the quarter.
Shares of Best Buy, up 8.4% so far this year through late May, fell after the retailer released a soft profit forecast for the current quarter and announced that chief administrative officer and CFO Sharon McCollam would step down.