Will Best Buy close more stores?
The beleaguered retailer, hit hard by 'showrooming' and fierce online competition, has few cards to play and may make an announcement Tuesday.
Best Buy, based in Richfield, Minn., has announced two rounds of store closings, and influential retail analyst Stacy Widlitz argued on CNBC.com Monday that "investors would simply like to see more on the way." It's easy to see why. Best Buy has about 1,062 U.S. stores, up from 923 in 2008. Same-store sales, a key metric, have slumped in eight of the past 10 quarters. The retailer recently said comparable sales would continue to fall in the next quarter.
According to Reuters, Best Buy generates about $302,800 per employee in revenue annually, well below the industry average of more than $132 million. The company employs about 170,000 people. Of course, this trend is unsustainable. The question is what can Best Buy do about it.
Best Buy and other brick-and-mortar chains are trying to combat "showrooming"-- shoppers who look at merchandise in physical stores and later buy online at a discount. Investors have to be concerned about whether the retailer will "give away the store" with free shipping offers and by slashing prices to compete against rivals ranging from Amazon (AMZN) to Wal-Mart (WMT) to hhgregg (HGG).
Investors were heartened by the company's new chief financial officer, Sharon McCollam, who is credited with helping turn around Williams-Sonoma (WSM) by shrinking the company's store count. Though McCollam is confident Best Buy can improve its fortunes, skeptics abound. For one thing, its rivals can easily cut prices to match or exceed whatever Best Buy may charge. Then there's the buyout being pushed by company founder Richard Schulze.
Whomever runs Best Buy will be tasked with improving the company's ecommerce business. Last year, the company said it would double annual online sales in five years. Even under a best-case scenario, that's going to a tough goal to achieve. Turning around Best Buy will be even harder.
--Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
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Wait a minute is that a correct figure?
"Best Buy generates about $302,800 per employee in revenue annually, well below the industry average of more than $132 million"
So what they are saying here is each employee in the big box stores genrates 132 million in sales and most are working for 8 bucks an hour!
Wow just wow.
Not that I want these people to lose they're jobs but Best Buy stinks. I went in to ask about a specific laptop option that is on they're website and I talked to about 5 people and no one knew what the hell I was talking about. I also inquired about they're buy back program for laptops. I showed them the laptop I bought from them a year and a half prior for about $700. They wanted to give me $67 for it. What a joke. I won't be shopping there again.
I purchased my entire kitchen full of appliances through them a few years back. After paying them off ahead of schedule, I bought 2 air conditioners due to my central A/C failing.
I was never late on a payment, always paid mre than the minimum, and had no prior problems.
They decided to change my monthly due date a few days ahead, without my consent, and made me late on ONE payment. When I questioned them on it, they claimed they "can not reverse a late fee".
I paid off the balance immediately and never did business with them again.
They are failing due to their own practices, and I could not be happier!
Best Buy, YOU SUCK!!!
I have not shopped at Best buy since 2000. I purchased a car stereo for my wife's car and it died within 2 month's. When I took it back, I was told I would have to pay to have it taken out and shipped to be repaired. When I told them that the salesperson assured me that anything wrong would be taken care of in house, the person told me that I was misinformed and there was nothing he could do. The kicker is when I told them to just put it back in the car (he had already removed it) he put the cd that was causing the problem back in the player! Poor customer service will kill any business. I am not sad to this poor excuse of a retailer go by the wayside.
I was shopping for a new radio/CD player on my birthday a few years ago and I went all over town, checking every price, trying to find the best deals.
Guess what? Best Buy was not only not the best deal, they were the worst! They oversold the other stores by over $15. I ended up buying it at Sears instead.
And as if that's not enough, their employees are rude and annoying. Seriously, I can't spend more than 5 minutes in a Best Buy without, like, 3 different employees rolling up asking if I need help, as if I'm about to start stuffing phones in every orifice and running out of the store.
They're so suspicious and really obvious about it.
That's why they're crashing. They're expensive and annoying.
Wait, wait! How can this be?
We just re-elected a prez that according to voters is doing a good job on the economy, and the "middle class is doing fine!" If anything, Best Buy and ALL retail chains that sell goods made, shipped from, and sold by CHINA and JAPAN to us here should be hiring MORE workers!!
After all, the economy is booming, isn't it? This writer's got it all wrong.
A dis-satisfied voter and customer.
They don't have enough people to help the customer, not to mention, opening the doors at 10 am seems a little late in the day. The prices are high on many of things they have to offer. However, it is one of my favorite stores to shop for tv's, printers and other electronic toys. My suggestion would be for them to open the doors at 8am, pay the sales people commission on sales, cross train all employees to handle the entire store,
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The solid report comes a month after the retailer closed all of its Canadian operations.
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