Best Buy Co., Inc. (BBY): This Retailer Needs to Do More to Stay Relevant

Page 1 of 2

Of all the retailers today, it seems that Best Buy Co., Inc. (NYSE:BBY) is having the greatest difficulty producing big sales each quarter. The problem with Best Buy is that it is facing stiff competition from online retailers. Best Buy seems to be stuck in the brick and mortar business. This is not good for the company, as online retailers have been stealing market share from physical stores.

Best Buy Co., Inc. (NYSE:BBY) has its own online website like other online retailers, but it doesn’t match up to the them at all. In fact, it is good that Best Buy realizes that stores are struggling while online retailers are surging. Best Buy has 1,300 stores nationwide, and it wants to be able to wall off parts of its stores. After creating new space at their stores, they want to be able to sublease them out to smaller retailers.

Earnings on slight rebound

Best Buy Co., Inc. (NYSE:BBY)Despite Best Buy missing analyst earning estimates throughout most of 2012, the company had finally boosted its earnings slightly. Best Buy Reported a fourth-quarter loss of $409 million, or $1.21 per share. This compares better than the same quarter the previous year, where it had reported a loss of $1.82 billion, or $5.17 per share. The bad news is that the company still lost a significant amount of money, but the good news is that it didn’t lose as much as the previous year.

Revenue increased slightly to $16.71 billion from $16.67 billion the same period last year. I would say that Best Buy Co., Inc. (NYSE:BBY) still has a long way to go if they are to recover their business, and they need to change their strategy around to model themselves after online retailers. One of its problems is that Best Buy has an open showroom for displaying products, which was good back in the day. Right now customers take advantage of that by viewing the products at the stores, and then purchasing them online at a cheaper price from a competitor.

Intense competition

There are two major competitors that are giving Best Buy Co., Inc. (NYSE:BBY) some trouble. The first competition comes from another brick and mortar store, Wal-Mart Stores, Inc. (NYSE:WMT). The difference, though, is that Wal-Mart has cheaper prices and it also puts a lot of focus on its online store. Wal-Mart has done well for investors, as it is way off of its 52-week low of $57.18 per share, and is currently trading at around $77 per share.

Wal-Mart Stores, Inc. (NYSE:WMT) also has an excellent dividend yield of 2.43% for investors while. Wal-Mart didn’t quite do a home run on earnings so to say, but it did pretty well considering it has many stores. Wal-Mart Stores, Inc. (NYSE:WMT)’s earnings came in at $1.67 per share, way higher than consensus estimates of only $1.57 per share. Revenue came in at $127.1 billion, which was a little less than what analysts had expected. The good part is that Wal-Mart was able to turn in a profit, and not lose money like Best Buy did.

Another competitor that plagues Best Buy Co., Inc. (NYSE:BBY), and also fends off well against Wal-Mart is Amazon.com, Inc. (NASDAQ:AMZN). Amazon.com, Inc. (NASDAQ:AMZN) trades close to its 52-week high of $283 per share, but has a forward price to earnings ratio of 187. So why does Amazon’s stock trade so high compared to Wal-Mart Stores, Inc. (NYSE:WMT) and Best buy? The answer is pretty easy, it all comes down to online retailing.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits In The World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!