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Best Buy Co., Inc. Message Board

  • aam07e aam07e Jan 12, 2012 10:38 AM Flag

    Why Best Buy is Dying: Retail Reinvented, Again


    The 2011 holiday shopping season saw a 15 percent increase in online sales, up to $35.3 billion, according to Comscore, but consumer electronics retail bellweather Best Buy reported a one percent decline in holiday sales. What is going on? Pretty simple -- we are in the middle of another battle between brick and mortar and e-commerce and it will continue to drive our venture capital spending strategy. Follow the link below to read the full article on this story.

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    • What's pretty simple is that BBY is primarily a consumer electronics retailer. Prices on consumer electronics are dropping dramatically. So you have to sell significantly more items at lower prices to increase your sales, which are measured in dollars, not units.

      In a recession.

      Why same store sales are down only 1.5% is the shocker here.

      Newsflash. BBY and everyone else has an on line operation.

      • 1 Reply to thuddite
      • The reason why Best Buy survives is because of the existing competition. If another major retailer like a Circuit City or a Compusa came on board again; they would hurt. My biggest gripe about best buy: Most of the time when I want to buy something they do not have it in stock. So I consider best buy as the place where you look at and view the product. If you like the product they have on display; then you go to onlineto Newegg, Tiger direct, or another retailer and buy it many times a lower price. Right now Best buy will survive as long as no other retailer like them opens up shop.

    • Cash flow models also suggest that value could still lurk here. If Best Buy sees free cash flow (FCF) fall 6% a year for a decade and then flatten out to zero growth, the shares are still worth something north of $30 per share. You actually have to go to a decade of 14% annual FCF declines to get to today's share price, and if you assume a decade of 14% declines and then a drop to zero cash flow, the shares would still be worth north of $20

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