Best Buy is suffering and so is the market..

[BigMel]

Best Buy lowers outlook
In Best Buy's earnings announcement today, the electronics giant said fiscal 2009 earnings will be between $2.30 and $2.90 per share -- well below a previous forecast of between $3.25 and $3.40 per share, as well as below the consensus estimate for $3.02 per share.

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"Seismic changes in consumer behavior have created the most difficult climate we've ever seen. Best Buy simply can't adjust fast enough to maintain our earnings momentum for this year," CEO Brad Anderson said in a statement.

Best Buy shares slumped 6.7%, to $22.28 this afternoon.

The retailer said it expects same-store sales to decline by 1% in fiscal 2009, with revenue coming in between $43.7 billion and $45.4 billion. Analysts expect revenue of $46.2 billion.
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Like I have been saying for the last three months--BB needs to act diffeently than they have in the past..they have done very little to motivate people to get in there and shop...notwithstanding the need to achieve proper margins...they have refused to entice the average consumer to come and shop..no really good deals....over priced blu-rays, etc. In the last 4 months I have purchased about 70+ blu-rays- 90% from Amazon and Columbia House and I have split the rest between BB and CC. I used to buy 90% BB. It seems as times have gotten harder they rely too much on their Brand and not enough on the need to couple that strong brand with aggressive incentives...I am not saying give away the farm but they continue to act like it was 2007. Times are touch, people are really bargin shopping and they need to step up to the plate or they will continue to bleed to the Amazon's of the world..I just spent 1500 at Amazon in the last week on products I would normally buy at BB. Blu-Ray players, Blu-Rays, Adaptors, Asus Computer, etc..I love BB but they are killing themselves

[mikejet]

This means bigger and better sales and promotions coming! REJOICE!

[BACsader]

Originally Posted by mikejet

This means bigger and better sales and promotions coming! REJOICE!

That is not necessarily true. In fact, that is not what that means at all.

[benricci]

Yeah, it doesn't mean that at all.

[mikejet]

They have no choice, it would be the only way to bring customers into the store. Right now they have 18 months no interest on all purchases over $499. I expect more once Black Friday comes around.

[brett_day]

Originally Posted by mikejet

This means bigger and better sales and promotions coming! REJOICE!

it probably means the opposite, they are going to have to increase their gross profit and have a bigger impact on their bottom line, which will probably mean fewer sales, layoffs and a general overhaul of the way the company runs!

CC filed for chapter 11 bankruptcy yesterday, that's even after the announced 150 stores that will be closing, if BB is not careful they might have to do the same, as will many other retailers! This is a bad time for any business

[benricci]

Originally Posted by mikejet

They have no choice, it would be the only way to bring customers into the store.

Wrong, slashing prices is a short term win and is usually a sign of desperation or imminent liquidation. It's not the first move you make when you report a bad quarter, in a bad economy.

The CEO acknowledges a "seismic shift" in consumer patterns, meaning they need to change a number of strategies and corporate paradigms to remain successful.

[$plash]

if Best Buy is "suffering" then Circuit City must be on life support

[HD Man]

It's a tough economy for all businesses right now. With CC barely hanging on and trying to re-organize through bankruptcy, I wouldn't expect BB to have bigger and better sales at all. BB's prices on dvd's and BR's were a couple of bucks more than CC, so look for them to hold prices steady with some sales of higher margin items or manufacturer supported clearance/slo-moving items designed to lure people into stores.

The real competition could develop between Wal-Mart, Target, and BB for B&M stores.

[Clark Kent]

Unfortunately Circuit City going into bankruptcy will keep Best Buy's pricing relatively high. There just aren't a lot of national electronics retail chains left. I do think big ticket items like tvs will drop in pricing as component costs are coming down now that the price of oil is crashing.

[Russell_L]

I was at one of my local BBs yesterday, and frankly you wouldn't know that they were in trouble. The store was pretty busy, with several people looking at their (increased) stock of Blu-rays. (And yes, some were buying.) I counted at least 10 copies of the special-edition 'Hellboy-II' (the one with the extra thingamajig in a large box) and at least that many copies of the new 'Band of Brothers' box set. (Good price there at $54.99.) They also had NO copies of the 'Kung Fu Panda' BD, but I don't know whether they were just sold out because of their low sale price on it ($21.99) or because they just didn't get any in. (This title was also not on the shelf at another BB I visited yesterday.)

[Kryptron]

Originally Posted by mikejet

They have no choice, it would be the only way to bring customers into the store. Right now they have 18 months no interest on all purchases over $499. I expect more once Black Friday comes around.

They can't just start cutting prices because they are already taking a loss, what good is bringing a lot of customers in to the store if what they buy doesn't leave the store any profit?
Most of these stores make their profit of accessories, services plans, satellite sign ups,cellphone sign ups and store credit card sales.

[SquidPuppet]

Intels warning after the bell didnt help either.

AP
Intel slashes 4Q outlook on dimming PC demand
Wednesday November 12, 6:06 pm ET
By Jordan Robertson, AP Technology Writer
Intel chops more than $1 billion from 4Q sales forecast, profits wounded by dimming PC demand


SAN FRANCISCO (AP) -- Intel Corp. whacked more than $1 billion from its fourth-quarter revenue forecast and ratcheted down its profit expectations because a clampdown on spending is reducing demand for its chips.

Intel's announcement Wednesday illuminates how the economic crisis is rippling across industries. As consumers and businesses cut back on buying all kinds of things, their reduced purchases of PCs are harming computer makers and their suppliers. Intel is the world's largest supplier of microprocessors, the brains of personal computers, with roughly 80 percent of the global market.
Intel blamed "significantly weaker than expected demand in all geographies and market segments" and PC makers buying fewer new chips as they burn through existing inventory to save money.

[BigMel]

Yes, these are lean times but BB needs to do something to manage the perceived short fall that they have right now for Q4. They cannot just stick to their current strategy, something has to give that will drive traffic whilst also buiding same store sales. They must do an intense analysis of inventory, use this overage as door-busters, match their competitors as best as they can with normal sale items and then sell the extra services to increase their margins. Whatever they choices, one of them is to not stay status quo because that will be the kiss of death for Q4. And the way things look,unemployment is at 6.5% by years end it may be 6.75% or higher and is estimated to tip 10% this time next year-and this was a conservative estimate....

[fighthefutureofhd]

well that didn't come as too much of a shock. i've been thinking all along that the holiday season was going to be a lean one. even for blu-ray. i just don't think this is blu-ray's year. not because of anything blu-ray's done, but just because the economy is rough right now. i wouldn't be surprised if we start hearing of a lot of stores suffering. everybody's feeling the pinch. even the entertainment field. it's really going to be interesting couple of months.

[bhampton]

Well,

This topic along with the news of Circuit City going Chater 11 and Tweeter and Sound Advice closing stores,... makes me feel a little better about buying a somewhat crappy movie (Hancock) the other day at Best Buy for full MSRP. (Maybe $29.99 is actually below MSRP but if that's the case no one will ever buy this title for retail price.)

I think from now on I'm going to try to take more of my business to Best Buy. If they will price match I'll get everything there. The only thing they won't be able to compete with is the used discs I find at Newbury.

Locally I have other options like WalMart and Bj's but those other stores sell alot of other items that people can't stop buying in a bad economy. (Like food,..home supplies, even auto parts.) So... I'm going to try to do my part to keep BB in the game.

Plus... I'll get reward zone points in the process.

-Brian

[masob98]

Yeah I rarely shop at best buy, shoot I rarely buy blurays period. I live on a budget, so I only buy the blus that I will definately watch over and over. This are some hard times we are living in and scary enough but they are probably gonna get worse.

[Blu-Ron]

I'll go back to BB when I don't get asked 5 times by 4 different people,"anything I can help you with?" or "find everything OK?"

[BigMel]

Originally Posted by Blu-Ron

I'll go back to BB when I don't get asked 5 times by 4 different people,"anything I can help you with?" or "find everything OK?"

Dude, they need that type of activity to differentiate themselves. I cannot count the number of times I have been in CC and realized that I had been walking around for 20 min and not seen one salesperson. When I spotted them they were usually comparing tattoos or checking out customers g-strings (at least the losers at the CC in NJ where I live). Nevetheless, BB needs to keep focus on their core mission whilst ensuring they further differentiate themselves during these touch times to get our share of wallet.

[Blu-Ron]

Originally Posted by BigMel

Dude, they need that type of activity to differentiate themselves. I cannot count the number of times I have been in CC and realized that I had been walking around for 20 min and not seen one salesperson. When I spotted them they were usually comparing tattoos or checking out customers g-strings (at least the losers at the CC in NJ where I live). Nevetheless, BB needs to keep focus on their core mission whilst ensuring they further differentiate themselves during these touch times to get our share of wallet.

Oh I totally agree with ya. It's just a little too much when the same staff person asks you twice. They are robotic. She didn't even realize she asked me 4 minutes earlier.