The Zacks Analyst Blog Highlights:Best Buy, Target, RadioShack, Amazon.com and
CHICAGO, Ill., Feb. 25, 2013
CHICAGO, Ill., Feb. 25, 2013 /PRNewswire/ -- Zacks.com announces the list of
stocks featured in the Analyst Blog. Every day the Zacks Equity Research
analysts discuss the latest news and events impacting stocks and the financial
markets. Stocks recently featured in the blog include Best Buy Co., Inc.
(NYSE:BBY), Target Corp. (NYSE:TGT), RadioShack Corp. (NYSE:RSH), Amazon.com
Inc. (Nasdaq:AMZN) and Google Inc. (Nasdaq:GOOG).
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Here are highlights from Friday's Analyst Blog:
Can Best Buy Combat 'Showrooming'?
Best Buy Co., Inc. (NYSE:BBY), which is slated to report its fourth-quarter
results on February 28, has had a tough year. The retailer had a disappointing
third quarter. Earnings per share dropped from the year-ago quarter figure of
47 cents to just 3 cents, a decline of nearly 94%.
Total revenue and same store sales declined by 3.5% and 4.3%, respectively.
Moreover, comparable-store sales declined 4% due to sales declines in gaming,
notebooks, digital imaging and televisions.
But the tide seems to have turned in recent months. The holiday season has
been better than expected for Best Buy. Shoppers have purchased higher numbers
of flat screen televisions and other major appliances. These developments have
provided optimism to investors, boosting the share price from $12.20 on Dec
12, 2012 to $17.41 at the closing of markets on February 21, 2013.
The major challenge which Best Buy faces along with traditional retailers like
Target Corp. (NYSE:TGT) and smaller players like RadioShack Corp. (NYSE:RSH)
is from online retailers like Amazon.com Inc. (Nasdaq:AMZN). The threat of
online retail is even more relevant because of a practice which has come to be
called "showrooming". This refers to a phenomenon where customers examine
merchandise in person at a physical store before purchasing it online at a
However, a different kind of showrooming is emerging where customers visit
stores armed with their smartphones. In this case, the loss of sales could be
even more harmful.
Many retailers, such as Target, have chosen to combat this by launching
shopping apps which drive traffic to their own websites. Others like Toys R Us
have launched exclusive products. The logic here is that if a product is
available exclusively from that retailer, the consumer can no longer opt to
purchase it at a cheaper price online.
Best Buy is attempting to fight showrooming by adopting a price matching
strategy. Starting Match 3, it will match prices for "all local retail
competitors and 19 major online competitors in all product categories and on
nearly all in-stock products, whenever asked by a customer." Of course, this
offer is restricted to a single item and there are other exclusions, but it's
the first concrete effort to combat the phenomenon.
Target has already made its price matching policy permanent and stopped
selling Amazon's Kindle. This is a clear signal that it will no longer stock
products from a company that was aggressively eating away at its sales.
Clearly, traditional retailers cannot afford to give up market share to online
competition and are even aggressively trying to grab back lost customers.
The bigger threat is possibly from the likes of Google Inc. (Nasdaq:GOOG)
which is expected to open its own retail outlets.
One unique proposition which Best Buy had offered to customers was its Geek
Squad which provided assistance to consumers who had trouble figuring out
modern day gadgets. Even so, it was considered to be below par compared to
Apple's Genius Bar. If Microsoft and Google both set up stores with similar
specialist employees, the Geek Squad could begin to lose its novelty
However, all is not lost for Best Buy. Its recent success and a concurrent
appreciation in share price have shored up its fortunes. The company has even
seen its ratings improved by some brokers. Clearly, better days may be ahead
for Best Buy.
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