Best Buy’s Last Stand

Best Buy’s shares are off 24% in the past year. Investors do not think much of its future. The primary reason for that is the success of Amazon, which has been at the center of the debate about Best Buy’s fortunes for years. Wall Street has signaled it believes Best Buy will continue to lose that game.

Two numbers tell the story of Best Buy’s current situation. In the most recently reported quarter, same domestic store sales dropped 2.1%. Astonishingly, domestic only sales were off 11.2%. Best Buy expects same-store sales to fall 1% to 4% in its current fiscal year. Best Buy cannot paint that as anything other than a disaster.

When earnings were announced, Corie Barry, Best Buy CEO said: “We are deliberately investing in our future and furthering our competitive differentiation which, as expected, impacted our Q4 profitability. The biggest areas of investment were our new membership program, technology and Best Buy Health, all core to our future growth potential.” It is hard to say how he could have come up with a worse excuse.

Zack’s gave another reason that Best Buy’s future will be terrible. “BBY’s full-year Zacks Consensus Estimates are calling for earnings of $8.97 per share and revenue of $50.08 billion. These results would represent year-over-year changes of -10.39% and -3.24%, respectively.”

What else is left to be said?

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