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Best Buy Grabbed Market Share, Despite Lower Sales
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Best Buy appeared to gain market share from rivals in the United States during the key holiday season and stood same-store sales decline in December.
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AP |
The news boosted Best Buy [BBY
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] shares 3.3 percent to close at $24.22 in trading on Friday and also allayed some concerns that all its holiday sales were driven by profit-sapping discounts.
The world's largest consumer electronics chain said on Friday that sales at stores open at least 14 months fell 0.4 percent at its U.S. unit, while they slipped 4.3 percent internationally on weakness in Canada and Europe.
“Given competitor comments and supplier input, these are relatively impressive results,”' Credit Suisse analyst Gary Balter said, adding that “the reconfirmation of... guidance by management should put to bed the worries of massive margin deterioration to drive those sales.”
While the international same-store sales number missed most analyst expectations, many such as David Strasser at Janney Capital Markets and Anthony Chukumba at BB&T Capital Markets said they were happy with Best Buy's domestic performance, especially since they believe the chain gained market share in the United States during the key selling season.
“It does appear that Best Buy, at least from a brick-and-mortar perspective, picked up market share in December,” Chukumba said, pointing to weak performance in the consumer electronics sector by Costco Wholesale [COST
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“It is good enough from my perspective,” Chukumba said. “I am just happy they are going to make (profit numbers for) the quarter.”
Unlike the 2010 holiday season when Best Buy held the line on discounts and promoted only pricey goods, this time around it offered deep discounts on items ranging from flat-screen TVs to digital cameras.
It even promised to match any lower prices its brick-and-mortar rivals advertised during the season's peak, and offered free shipping.
In its third holiday season after the bankruptcy of archrival Circuit City, Best Buy faced cut-throat competition — often on price — from chains such as Wal-Mart Stores [WMT
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In order to win online shoppers and those who comparison-shop using their cellphones, Best Buy dramatically increased its spending on mobile and digital advertising, as well as carried more products online.
Strasser said Best Buy's appliance business gained share from the likes of Sears Holdings [SHLD
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Demand was strong for tablets, mobile phones and e-readers, while gaming products and televisions had fewer takers.
The news came less than a month after Best Buy's third-quarter profit missed Wall Street estimates as bigger discounts at the start of the holiday selling season ate into profit.
On Friday, Best Buy still reaffirmed its outlook for the current financial year calling for earnings of $3.35-$3.65 a share, including share repurchases, but excluding items.
Data is a real-time snapshot *Data is delayed at least 15 minutes
