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.

By Jonathan Berr Nov 12, 2012 3:24PM
Credit: BRENDAN MCDERMID/Newscom/RTR
Caption: People walk past a Best Buy store in New York in August 2012The question isn't whether Best Buy (BBY) CEO Hubert Joly will announce more store closings and layoffs during the beleaguered retailer's analyst day Tuesday but how many and how soon. He has little choice.

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.


More from Top Stocks



 







145Comments
Nov 13, 2012 4:00PM
avatar
Duh...who wouldn't buy the same products online at cheaper price.....Best Buy employees are dumb as dirt anyway.
Nov 13, 2012 3:57PM
avatar

Can not wait till they have to shut ALL their doors.  They are not a best buy in any terms, and they have not value of customers.  I had a BB Credit card and wanted a limit increase.  They told me I would have to apply for a new card and cancel my current card.  I said fine.  It came back with a LOWER line of credit.  I have never shopped there since...just waiting for the Karma to return to them and have all the doors be closed.

Nov 13, 2012 3:10PM
avatar
Hey nascar29 yoiu dip s--t  was it Obama that made Jeff G run into Bowyer you GOP dopes are brutal I bought Kleenex stock after election and made a bundle from you republican idiots crying
Nov 13, 2012 3:04PM
avatar

Why pay a middleman?  Sounds like consumers are just using good business sense.

 

Best Buy focused their whole game on paying high school and college kids a low salary, no commisions, with the promise of in-house discounts on electronics, all the while peddling useless Extended Service Warranties where 95% that goes directly to the bottom line.

 

The whole "showroom" thing will be an interesting evolution in the future. Most people still prefer to see something live and in person, especially things like televisions where picture quality can't be accurately reproduced online.

Nov 13, 2012 3:03PM
avatar
Two friends brought ne computers tha the Geek Squad  looked at One had virus and one didnt boot. They said one was shot and would need to buy a new one only thing wrong was the charger. The other one they charged 160 bucks to remove virus I ran programs found over 10 infections . Their geeks are ripoffs
Nov 13, 2012 2:52PM
avatar

When I am bored or desperate, I go shopping at Best Buy.  Unfortunately, Best Buy has neither a good stock of desirable products, their prices are some of the highest I have seen.  The help is anything but help, other than trying to sell me extended warranties or phones.

 

I do not mind paying list price for a good product that I want, but Best Buy has to have it in stock for at least list price, much of the time that does not happen.

Nov 13, 2012 2:47PM
avatar

I found from a visit to the Best Buy in my area, that the models they are carrying on TV's was absolutely the worst selection of out of date junk at top dollar. This is not what I expected to see. Made me think that they were about to go out of business.

Nov 13, 2012 2:30PM
avatar
I had a very good experience with the Best Buy here in Maine. I am not very handy with computers and recently purchased an IPAD. Customer service sat down with me for over 2 hrs and made sure I was completely comfortable using the IPAD effectively before leaving the store. I can't think of any other store that would be that patient. I certainly hope they keep our local Best Buy open.
Nov 13, 2012 2:27PM
avatar
I dont understand whats kept them in business this long, that place blows! The customer service consists of young, unknowing, 18-20 somethings that are unfamiliar with the product. They pretend to know, when they begin the sale they sound convinceing but when you start to ask questions they reveal their ignorance. Best Buy also makes it nearly impossible to pay a bill. They dont accept their own credit card payments in the store, it must be mailed but most folks dont know that. If you intend to make a payment in person and right on time, that payment will be late. If you want to make a payment over the phone you will have to pay an additional fee. It seems they're more interested in ruining one's credit than they are in assuring their customers are satisfied and want to come back in the future. I purchase my Dell 1525 from them, paid it off in a few months and never darkened their door again.
Nov 13, 2012 2:25PM
avatar

Not only do they NOT know the product they have on the shelf but they don't even know the people that work for them. My son had an interview with them and durning the interview he let them know that he was getting married in a month and gave them the date. They said "not a problem." They hired him and a week later they scheduled him on the day of his wedding. He went to them and let them know about the issue. They in turn told him that this was the second time he had been an inconvenence to them and that they had hired him to work, not to take off all the time. While he was "training" instead of doing the modules in the back and learning the products. They just put him on the floor and said wing it, that is how you learn. So when a customer comes up and asks a question about something, there is one of the reasons they look clueless. BESTBUY IS WEAK. And the only reason they are still up and running is because people want to have a hands on look at something before they buy it ON LINE.

Nov 13, 2012 2:14PM
avatar
Why is MSN so hell bent on seeing Best Buy, J.C.Penny, and Sears go out of business?
Nov 13, 2012 2:10PM
avatar
At least they did not blame it on Obamacare...If they did I would add them to the list of people I will never buy from...like the Pizza place for example...

Nov 13, 2012 2:01PM
avatar
Best Buy is a great place to shop---and get help if you need it.  I have purchased two desktop computers, one laptop, and a portable DVD player.  All have been great quality and reasonable prices.  The store employees were very helpful when we had questions.  Recently I helped a family member purchase her first laptop there.  I would hate to see them close more stores.
Nov 13, 2012 1:41PM
avatar
If they do, it better be after the Xmas holidays, huh?
Nov 13, 2012 1:39PM
avatar

I had the very best customer service experience at Best Buy. I was surprised and it was nice. I brought a windows 8 computer and had to returned it. not one hassle the customer service lady smiled and said ok.  No problems at all including the software.  She was nice, polite, and just did it right WOW. They had the best mix of new computers to pick from and the guy on the floor as in knowledgeable. I will go back to BB. Good stuff.

Nov 13, 2012 1:38PM
avatar

"Do I work for Best Buy or have any family or friends who work there?  NO!  Do I or have I ever owned stock in Best Buy?  NO!"

 

Well, since nobody can verify these are truthful statements, we can only take your word for it.  That carries as much as the integrity of the bozo now in the White House for the next 4 years.  However, your point is true that all retail chains have their issues, but in fairness overall, they do NOT care about their customers.  They hire cheap, don't care if you are satisfied, because there's someone right behind you that will take your place as a customer.  Walmart, Target, and all of these store chains run the same exact way, and it will NEVER change skip.

 

Sincerely,

 

A dis-satisfied customer and voter

 


 

Nov 13, 2012 1:36PM
avatar
Went to best buy to have a computer fixed, they basically said we have new ones for sale and that it would be a waste of money to fix the old one (broken charging port). I then went to a local computer shop and they are fixing it for $80. Guess I will buy my next computer from that same local shop.
Nov 13, 2012 1:28PM
avatar
I have to tell you that these anti-Best Buy comments are really humorous in that you only are hearing their side and not Best Buy's side. Personally I have never had a problem with Best Buy and I have over the years purchased major appliances, TV's, Computers, cell phones, audio gear, etc. from them. I have had for the most part intelligent, knowledgeable help, but it also helps if one does some homework ahead of entering the store.  I have had more issues with Sears over the years than any other retailer.  And Walmart sales people in the Electronics Dept  are nothing more than glorified cashiers and stock help.
Do I work for Best Buy or have any family or friends who work there?  NO!  Do I or have I ever owned stock in Best Buy?  NO!
I just happened to be a very satisfied customer of them.  No retail chain is perfect.  Example I needed to match paint for the outside of the house.  Home Depot and Lowes have a computer that can scan a chip and match the color. HD is closer than Lowes. 3 times I went to HD and their machine was broken although the clerk kept saying it was going to be fixed in a day., ended up at Lowes. But I will still shop at HD.  Nobody including some of these commenter's are perfect. I know I'm knot.
  
Nov 13, 2012 1:28PM
avatar
Went to the local Best Buy to purchase a new touch screen computer, about $1000, was told they were on display but they did not have any in stock.  When were they to be available, no one knew, asked 4 people, all I can say is this retailer is now the new definition of STUPID
Nov 13, 2012 1:19PM
avatar

Best Buy is just one of many store chains that will crash and burn late this year into next.  Other stores WILL include the likes of JCP, Sears, K-mart, and others.  With internet sales climbing, this only has a negative effect on ALL store chains, not just the ones in trouble.  Also, for those bashing the wanna be prez just re-elected, realistically, he cannot be held responsible for the downturn of these stores.  That blame goes right to the internet, and tech as it is growing.  Store chains find it cheaper and easier to just go online with their sales.  By going online, store chains avoid:

 

Incompetent workers

Having to pay salaries/bonuses

Having to pay for electricity/rent/gas/insurance for stores

Having to pay for security personel

 

This phase of shopping also adds to the swelling number of UNEMPLOYED in this country also.  Bottom line:  With things like TAXES ON THE RICH, TAXES ON EVERY TAXPAYER and LESS REVENUE expected right after Jan 1st, you can be assured that Best Buy won't be the ONLY store to lock it's doors...

 

Just saying...

 

Sincerely,

 

A dis-satisfied customer and voter

 

 

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

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.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

116
116 rated 1
265
265 rated 2
429
429 rated 3
612
612 rated 4
499
499 rated 5
525
525 rated 6
701
701 rated 7
533
533 rated 8
337
337 rated 9
131
131 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
UPLULTRA PETROLEUM Corp10
COPCONOCOPHILLIPS9
TAT&T Inc9
DVNDEVON ENERGY CORPORATION9
EOGEOG RESOURCES Inc9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.