Outlook: Can Best Buy Survive Increasing Price Competition?

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Source: Getty Images

Source: Getty Images

Best Buy (NYSE:BBY) will report fiscal Q4:14 results before market open on Thursday, February 27, and will host a conference call at 5 a.m. PT (dial-in: 877-941-6010877-941-6010; Conf. ID: 4669690; Webcast: http://www.investors.bestbuy.com).

Q4 revenues and earnings are likely to be in line with our estimates, revised after Best Buy released holiday sales results in January. We estimate revenue of $14.8 billion and EPS of $1.06 versus consensus for revenue of $14.7 billion and EPS of $1.01. We expect total comps of down 0.7 percent (domestic down 0.9 percent, international up 0.1 percent.)

Best Buy’s holiday sales results (9-weeks ending January 4) were poor, with comps down 0.8 percent (down 0.9 percent domestically, up 0.1 percent internationally.) Domestic growth in computing, appliances and gaming were offset by declines in digital imaging, movies, and MP3 players. International revenues were down on store closings and negative FX, but comparable-store sales were slightly positive.

The domestic comps declines were attributed to the promotional environment, supply constraints for tablets and mobile phones, significant store traffic declines, and a disappointing mobile phone market. The NPD Group said revenue for the CE industry was down 2.4 percent; Best Buy’s CE domestic comp of down 6 percent implies to us market share losses to online competitors.

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