Best Buy results, same-store sales weak; shares tumble

Comments (2)
ODM1972 wrote:

I find it strange that Amazon can have a $274 million quarterly loss and they seem to be the poster child for successful retail. Look at their revenue and then look at their profit. They are a mirror image of one another. Revenue for the first three quarters was up 25%, but profit was down 130% ($454 million profit to $137 million loss). Last year was not much better. Revenue was up 36% YoY, but profit was down 45%. That has been a common trend for Amazon over the last few years. How long can they last if that trend continues? Yes, Amazon had a goodwill impairment charge that added to the already poor numbers, but last year Best Buy had a $1.3 billion impairment charge to goodwill which added to the loss reported on their 10-K. (The goodwill charge and a $1.2 billion cash payment to buyout a profit sharing agreement were the main reasons for the FY 2012 loss, according to the data in the 10-K.)

I am not defending Best Buy’s dismal quarterly numbers and if they do not change direction soon they are in definite trouble, but Amazon’s numbers are not much better.

Also, please don’t quote people who are obviously out of touch with reality like Rakesh Agrawal from reDesign Mobile. I actually buy a lot of consumer electronics gear and have done for years. You cannot buy the exact same $80 cable online for $5. If you could, I would. That is the most ridiculous thing I have ever heard. It is kind of like saying – why spend $250,000 on a car at a dealership when you can get one online for $500? Oh, that’s right, they are two completely different products.

Nov 20, 2012 5:19pm EST  --  Report as abuse
NyukNyukNyuk wrote:

“Few people are going to be willing to pay $80 for a cable in-store when they know they can buy an equivalent product online for $5,”

I’m not sure the cable example is indicative of all of Best Buy’s products, but it’s one I’m familiar with. Their cable prices seem similar to Office Depot and Officemax, but are high compared with some other retailers. The $20 Ethernet cable at Best Buy might be marginally better than the $7 cables I buy at Menards down the street, but the $7 cable is good enough and is CAT-6 compliant. That’s all I need. Likewise for HDMI and other cables I buy regularly for work. Heck, even Radio Shack will save you a bundle over Best Buy. Point is, you don’t need to compare Best Buy to the cheap online cables, you can still do much better shopping their competitors.

Another issue is product selection and obsolescence. This is a problem with all retail stores, not just Best Buy. You go in to a store and see a product you like, then go to the manufacturer’s web site, only to find that the product in the store is an old model they’re trying to get rid of, at regular price to boot. I’ve had that happen many times. For some products, it’s just a small incremental improvement in the new model, but in other fast-changing technologies, like SSD drives, you may find a vast selection of newer, better technology online than you’ll find in the store. I don’t know what the answer to this problem is, but it’s a problem that all retailers have to address.

Nov 20, 2012 9:44pm EST  --  Report as abuse
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