Are Best Buy's prices too low?
Staying competitive on price in a tough sector will means thinner margins for the electronics retailer, which could worry investors.
Best Buy (BBY) CEO Hubert Joly has been the toast of Wall Street this year, bringing the consumer electronics retailer back from oblivion and causing its stock to skyrocket more than 200%.
Its shares, however, nosedived 11% Tuesday to close at $38.78 as investors worried about Joly's plans to hike spending ahead of the crucial holiday season while also slashing prices -- which will result in smaller profit margins.
This shouldn’t have been a surprise given that consumer electronics retailing is cutthroat and includes ferocious competitors like Amazon (AMZN).
(Post continues after video.)
When stocks such as Best Buy are pushed to dizzying heights, the slightest negative sentiment can bring them down hard, as was proven on Tuesday. Wall Street ignored the better-than-expected quarterly results and first gain in same-store sales in three years, and instead chose to focus on potentially leaner profits.
Even with this tumble, Best Buy is a top performer in the S&P 500 ($INX) for 2013. And it could have even more gas in its tank. The stock trades at a 16% discount to its average 52-week price target.
Though analysts are divided on Best Buy’s future, they credit Joly with making the chain more competitive by slashing costs and matching prices offered by rivals. But Best Buy’s road ahead remains arduous, especially as it heads into a hit-or-miss holiday season.
More Inside the Ticker:
HDMI Cable @ Best buy $29.99+
HMDI Cable @ Amazon/Newegg $3.99
To answer your question MSN, No
BestBuy prices too low?? Far from it since Amazon 99% of the time beats them on what little "exact" models/products BestBuy sells. Of course, I could drive to my local BestBuy and out of the graciousness of their hearts IF it's the same exact model number (rarity) they will match Amazon/etc. prices? SO, all I have to do is burn my gas, wear on my car, and fight traffic to get SAME deal I can from comfort of my pc chair off online retailers? On two occasions I called Amazon customer service letting them know "BestBuy" was going to price match what I was interested in. Their reply: "Mr. H____ we will give you an additional $10.00 off.."
BestBuy (catchy name far from truth) can not compete with online retailers; due to the large overhead on its building and its labor force (pushy kid in blue) trying to sell you every known accessory for what you may purchase while reciting a memorized/scripted sales pitch. Please keep in mind a multitude of BestBuy "leaders/MVPs" also led Ultimate Electronics and Circuit City...right into bankruptcy. After BestBuy folds that is going to look quite impressive on a resume/interview. "Well I am a great leader with management experience...uhhh yeah I led Circuit City...Ultimate Electronics too...and I was an outstanding leader at BestBuy ." In translation it means: "I am a three time loser wanting to financially pillage and rape your company next."
Retail itself is a dirty, and cutthroat business; especially at BestBuy. Promotions are routinely based upon who you know, and not what you know; however if you have knowledge of the "right" kind it may override the usual norm of promotion. General managers often surround themselves with kids who are of no threat while getting rid of any employee who has the knowledge and talent to challenge them. It is not called "Retail Hell" as a joke.
As we approach the holiday season notice all the positive propaganda concerning BestBuy? I know I better be careful, since BestBuy is one of Microsoft's "bread n butter companies" that sell Windows based devices/Microsoft products; hence this upbeat article. It is to manipulate people into still shopping with them, so you can be sold an almost worthless Black Tie Protection plan that is used 1/10 of the time LOL. After recently viewing bestbuy.com I noticed a pattern. They are not even selling the latest technology, but it appears as if they are just trying to "dump" their current inventory.
I would be extremely cautious of so called BestBuy Black Friday deals. Usually, they consist of tvs, etc. that did not sell well throughout the year. In addition, they are infamous for special ordering lower quality notebooks, etc. for Black Friday blow out limited quantity sales. Furthermore, like it has already been posted beware of those great prices on HDMI cables at your local BestBuy. There is an old saying, "if it sounds too good to be true...it probably isn't."
The brick n mortar Black Friday chaos is almost upon us and I am so glad Amazon/other online retailers rolled out early Black Friday deals! ALL my shopping is done and I did it from comfort of my home without even having to leave my driveway. I truly got the "bestbuys."
Who am I you may ask? How do I know so much about BestBuy internal "affairs?" I am former "special" employee 558955 turned author. I am near completion of my unauthorized book, which involved legal consultations to insure I have not gone beyond any legal limits. If you desire to discover how BestBuy really works you may find my soon to be proofread/published/released book quite interesting, "Behind The Doors."
I don't really agree with this article. I think Best Buy deals are far more expensive than what you see on Amazon. My husband and I are avid Amazon shoppers. I have yet to save money through Best Buy to be honest. Amazon is the way to go and many people are realizing that, including the Amazon Prime members who get their product in the mail within 2 days with free shipping. Most people are more concious on how much their spending at this time thus their willing to wait just 2 days before getting that cardboard box in the mail.
Best Buy...rarely is the best buy you can get.
Their geek squad didn't even get an install correct when I bought a computer there about 10 years ago.
I learned how to do it all myself shortly after that...just so I could.
Also self-taught to repair my own computer software,hardware,and everything else possible.
They have it coming.
Don't invest in a sinking ship, people.
NO, prices aren't too low...but they are now very competitive and superior to outlets they didn't use to be. 3 years ago, you couldn't possibly buy a computer or tv from Best Buy cheaper (and same quality) than Wal-Mart, Target or K-Mart....
NOW, the quality at those locations isn't normally on par, and when it is, it appears Best Buy has as good or better pricing, and financing and better service and support....The only catch I've seen is that you can't layaway at Best Buy, and at SOME of the Big Box retailers, you can.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The stock market finished an upbeat week on a mixed note. The S&P 500 shed less than a point, ending the week higher by 1.3%, while the Dow Jones Industrial Average (+0.1%) cemented a 1.7% advance for the week. High-beta names underperformed, which weighed on the Nasdaq Composite (-0.3%) and the Russell 2000 (-1.3%).
Equity indices displayed strength in the early going with the S&P 500 tagging the 2,019 level during the opening 30 minutes of the action. However, ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'