Best Buy going south with Circuit City??

[southfork]

Looks like BBY going south, I shorted 400 shares on the news at $24.71, now at 23.71, up $400 on the trade so far, any thoughts on this dropping below $20 quickly?

http://www.usatoday.com/money/companies/earnings/story/2012-03-29/best-buy/53852802/1


MINNEAPOLIS (AP) – Best Buy plans to close 50 big box stores and open 100 small mobile locations in the U.S. in fiscal 2013 and cut $800 million in costs by fiscal 2015.







www.bestbuy.com
The news came Thursday as the biggest U.S. specialty electronics retailer posted a fiscal fourth quarter loss, partly due to restructuring charges.

Despite the loss, Best Buy's adjusted results for the quarter topped Wall Street's expectations. But the company's full year revenue guidance fell slightly short of analysts' expectations, sending its stock down 6%.

Best Buy, which has 1,450 locations nationwide and 2,900 globally, is focusing on closing some of its hulking stores to concentrate on smaller Best Buy Mobile outlets because of two emerging trends. Sales of TVs, digital cameras and videogame consoles have weakened, while sales of tablet computers, smartphones and e-readers have increased. And with the rise of competition from Internet rivals like Amazon.com, shoppers aren't flocking to big-box stores like they used to.

A list of the stores to be closed was not immediately available. Best Buy said Thursday: "We will announce details about specific store locations and timing for closings once they are finalized."

Best Buy is trying to avoid the fate of its former rival Circuit City, which went out of business in 2009. Other retailers with large stores are also shrinking their footprint. Sears Holdings, for example, said earlier this month it would close 100 to 120 stores to become nimbler.

Best Buy lost $1.7 billion, or $4.89 per share, for the period ended March 3. That compares with a profit of $651 million, or $1.62 per share, a year ago.

The Minneapolis company said its quarterly results included $2.6 billion in charges. They were mostly related to its purchase of Carphone Warehouse Group's interest in the Best Buy Mobile profit-sharing agreement and related costs, as well as an impairment charge tied to writing off Best Buy Europe goodwill and restructuring charges.

Taking these items out, adjusted earnings were $2.47 per share, above the $2.15 per share that analysts surveyed by FactSet forecast.

Revenue rose 3% to $16.08 billion, but missed Wall Street's $17.18 billion estimate.

Best Buy's stock (BBY) was off more than 9% by noon.

Revenue at stores open at least a year — an indicator of a retailer's health — slipped 2.4%. But it was a smaller drop than a year earlier, when the company reported a 4.7% decline.

For the full year, Best Buy lost $1.23 billion, or $3.36 per share, compared with a profit of $1.28 billion, or $3.08 per share, the prior year. Adjusted earnings were $3.64 per share, which tops the previous year's $3.43 per share.

[budfox]

Sounds like they're adapting to market forces. Best Buy came in and kicked CC's ass.

If they can change their business model in time they may make it. Keep a tight stop on it. Their only competition out there is the online retailers.

They'll need to shrink store size.

[Hystckndle]

10-4 on the store size.
There is one on my walk route in the evenings.
After 1-1/2 miles I go in there just to check it out before waking home.
Been doing this for years. Inventory is t-h-i-n.
Capital letters. Don't get me wrong, they have stuff everywhere, but no where near like it used to be.
( same with everywhere though )
I have noticed a more dramitic change in the last year or so.
I would think that anyone whose business model was heavy in selling DVDs and CDs
needs to be doing some soul searching. That ain't the future.
But they already know it. Bet ya the suits are bailing.
I think the stores would convert well into a roller rink.

[Meetzos]

Sales of TVs, digital cameras and videogame consoles have weakened...


And with the rise of competition from Internet rivals like Amazon.com, shoppers aren't flocking to big-box stores like they used to.

I can believe internet business is cutting into their action, but the big ticket items are not going to be bought when you don't have a job or make $10. an hour.

[gringott]

They are history, it is just a matter of time. They had a nice run, now it is over.

[funk]

They are history, it is just a matter of time. They had a nice run, now it is over.

Agree, there is no point in driving to a brick and mortar to buy electronics that are more expensive, from sales people who don't know what they're talking about.

I buy 90% of my things from the internet. There you can read reviews from people who own the product and then sit back and wait for it to be delivered to your house.

[JFN111]

Best Buy is turning their focus to smaller stores with an emphasis on cell phones.
http://www.startribune.com/business/145251675.html

Best Buy Co. Inc. CEO Brian Dunn emphasized the company was not retreating from its home market. True, the company will reduce its retail square footage in the Twin Cities by 20 percent. But in that void, Best Buy plans to increase number of locations by 20 percent with a mix of smaller-format stores including Best Buy Mobile and its experimental "Connected Stores" remodels.

[southfork]

Best Buy is turning their focus to smaller stores with an emphasis on cell phones.
http://www.startribune.com/business/145251675.html

The cell phone niche is already saturated, I doubt they will be able to generate sustainable revenues from this venue.

[southfork]

David Coursey, Contributor
Technology and people, trying to get along

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Tech|3/31/2012 @ 11:10PM |3,117 views
The Last Best Buy Story You (Or Anyone) Should Read
5 comments, 0 called-out + Comment now
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What is this fascination the Forbes.com readership seems to have with Best Buy?

Geez, they are closing 50 stores and you’d think it really mattered to someone besides the employees who will lose their jobs. Hundreds of thousands of readers click on these stories, several stories, all more-or-less saying the same thing. OK, maybe I am a bit envious, but I still don’t understand why people care so much about this outgoing attraction.

Forbes’ Larry Downes wrote the most comprehensive pre-mortem of Best Buy back on January 2 and it has amassed more than three million views since. He predicted a gradual sunset for Best Buy, which seems almost impossible to prevent.

Best Buy cannot be saved in its present form. My guess is much smaller stores might work, but that is the space Radio Shack already has staked out. Could Best Buy become a better Radio Shack than Radio Shack? I’d sure welcome one, but I wonder if Best Buy can navigate a drastic downsizing successfully.

I used to go into Best Buy fairly often, but that was more than 5 years ago. Today, my local store is a shadow of its former self. I used to go in for occasional computer accessories, but I stopped when the store never had what I needed. Staples is today more likely to have what I need than Best Buy.

I did buy a car stereo at Best Buy when the one in my van failed. I went there because I wanted to replace a Sony with a Sony for plug compatibility. Best Buy could not conveniently install it for me (which is why I decided I needed the same connector) and I ended up doing the work myself.

While I am no longer the connoisseur of consumer electronics that I used to be, Best Buy is still either too low-end or too expensive for me. And Costco is a far better vendor, across-the-board, in my experience. If Costco sells it, I’ll probably buy it from them for their easy returns, low prices, and good technical support.

I have already shared that I feel guilty when I buy books and other media from Amazon instead of my local Barnes & Noble store. I don’t have such qualms about Best Buy. Really, if it came down to it, I’d rather “save” the two local Radio Shacks with my consumer spending. Between Radio Shack and Staples (remember, I live in a city of 80,000) I can find most of what I want.

I am sad about what has happened to consumer electronics stores, but that started even before the Internet. Anyone besides me miss Allied Radio? Lafayette? The Radio Shack that still published catalogs? HeathKit stores, anyone?

Best Buy won’t go quickly, but the store we used to shop at is long gone and not coming back. If what’s left of Best Buy’s big stores go away, few will really care.