As I previewed a few days ago, consumer electronics retailer Best Buy Co., Inc. (NYSE: BBY) released quarterly results yesterday to very decent fanfare. BBY shares are up over 1% today but they dropped 2.5% yesterday in response to the earnings. This is despite the quarterly results showing the retailer to be in very good shape, all things considered, posting an 18% jump in fourth-quarter profit. The Street, meanwhile, yawned. Apparently, a good impression takes more -- much more -- than that.Best Buy earned $763 million ($1.55 EPS) for the fourth quarter, up from $644 million ($1.29 EPS) for the year-ago period, while beating consensus estimates by 3 cents per share. Revenue topped out for the quarter at $12.9 billion while same-store sales crept up steadily to 5.9%.
Best Buy seems to be making all the right moves recently as it entrenches itself as the largest and most profitable consumer electronics chain in the U.S. (and outside of it), by entering the services market in a much larger way than it has in the past with the Speakeasy purchase. Meanwhile, competitors Circuit City Stores Inc. (NYSE: CC) and CompUSA are floundering pretty badly. It's not too easy to see who the winner is here, yes?
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Reader Comments (Page 1 of 1)
4-06-2007 @ 10:50AM
SMB1811 said...
Demonstrating a specific line of consumer electronic products from a well known and respected manufacturer, I get to see many competing CE stores in action.
The key to Bestbuy's success is treating the customer with respect and making them feel they are the most important person in the store, which they are. I have observed customers feeling confortable asking questions about new products and technologies without feeling stupid or out of place. The average "joe" who just uses technology, but has no idea on how it works or even cares about it (just like when most of us get into our automobiles - it goesw - it stops and few of us understnad how it works). People feel comfortable at Bestbuy. It's a fun place to shop and it seems like that strategy works. Bestbuy does not have the lowest prices. People who are computerphiles, audiophiles, or other consumer electronics expertise will find lower prices elsewhere. But Bestbuy Management or not looking for the bargain hunters who only shop for the lost leader that is advertised on a particular week’s flyer. They are looking for the average "joe" or "jane" who values the convenience of shopping in a fun place. The customers who really spend come back again and again. Often I have seen them coming in after receiving their own set of coupons, specifically targeted to these big spenders. In contrast the bottom feeders receive nothing. Imagine that. A mass market retailer effectively using their customer database to target specific customers who want what they want and do not hesitate to spend their disposable income. Somebody in Minn. understands the value of target marketing.
Like I said previously, I rep in other CE stores, like CompUSA, Circuit City, BJs, etc. so I have had the opportunity to observe as well as interact with these customers. These other stores seem like they haven’t a clue on market segmentation. I see and I am impressed with Bestbuy's market segmentation program and in their attitude toward their customers, reps and suppliers. Management tries to accommodate manufacturer reps as long as we reps mutually respect and help Bestbuy with what they are trying to accomplish. This is a healthy business relationship that mutually benefits all, particularly the customer.
My observations may be anecdotal, but the numbers seem to substantiate what I have experienced..