Earnings Preview: Best Buy

Analysts say Best Buy's market-share gains could help offset weak sales in fiscal 2nd quarter

• On 11:54 am EDT, Monday September 14, 2009

NEW YORK (AP) -- Electronics retailer Best Buy Co. is scheduled to report earnings for the fiscal second quarter on Tuesday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Richfield, Minn.-based Best Buy Co. has gained market share from Circuit City Stores closing, but it is still seeing sales constrained as consumers hold back on big-ticket items such as laptops. It continues to face tough competition from online retailers and mass merchants.

In August the company said it was slowing the pace of its new store openings, to 22 stores during the fiscal third quarter, down from an average of about 46 per quarter.

In June the company's CEO Brad Anderson retired and was replaced by Brian Dunn, formerly the president and chief operating officer of the company.

BY THE NUMBERS: Analysts polled by Thomson Reuters, on average, predicted a profit of 41 cents per share on revenue of $10.77 billion.

ANALYST TAKE: William Blair & Co. analyst Jack Murphy, who rates the company "Outperform," said in a note to investors on Thursday that he expects Best Buy's second quarter will show "significant market share gains, continued gross margin improvement and tight cost control."

He said weak demand will likely be offset by the share gains. Sales in stores open at least one year, a key retail metric, likely fell 5.5 percent during the quarter, he added.

Deutsche Banks analyst Mike Baker wrote in a client note that improving sales trends for some items should help results.

"Industry sales data have decelerated in the second quarter compared to the first quarter, but we believe that Best Buy's share gains should help offset this," he wrote. Sales trends for computers and phones are improving, he said, while gaming sales have slowed. He rates the company "Buy."

WHATS AHEAD: Analysts will be looking for any indication of further market share gains and plans for the all-important upcoming holiday season.

STOCK PERFORMANCE: The stock price fell about 4 percent during the quarter beginning May 1.

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