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.
The 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.
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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.
Sincerely,
A dis-satisfied voter and customer.
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.
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