Best Buy (BBY) reported quarterly earnings that were worse even than critics had expected. The world's largest electronics chain earned four cents a share compared to estimates of twelve cents. More concerning still, Best Buy said free cash flow would be as much as 30% lower than expectations.
The numbers call into question yet again whether or not Best Buy has a place in a world of e-commerce stores and low-price televisions. The answer depends on whether or not the chain can learn how to embrace what they are and stop complaining about what they aren't.
Specifically, Best Buy needs to stop complaining about things like Showrooming. Defined as customers coming into stores to "kick the tires" on products prior to buying online, showrooming has been fingered as one of the key reasons Best Buy won't make it. The reality is just the opposite.
Best Buy CEO Hubert Joly has said the chain is going to start embracing showrooming as a chance to sell to a captive audience. Retail expert Hitha Prabhakar says Best Buy should embrace the move more aggressively using their installed customer base. "There are 40 million people in Best Buy's loyalty customer program," she notes in the attached clip. "Why are they not focusing on those customers?"
Every circular advertisement you'll see from now until Christmas is designed to drive traffic into a store. With high gas prices, parking hassles and crowding, just getting people off the couch and into the store is tantamount to a major victory. To complain about customers looking for the best price is ludicrous.
If Best Buy is going to be here next year it's not going to be because they suddenly became better online retailers than Amazon (AMZN). For the last decade Best Buy has absolutely feasted on companies trying to match them head-to-head. Best Buy's sole advantage is having the public come in from the cold to shop or showroom in the store.
Between showrooming customers and an ex-CEO looking to buy the whole company, Best Buy has plenty of potential buyers. The company's problem lies in their inability to sell its products or itself. Unless it finds a way to do one or the other, next year's Black Friday will feature Best Buy stores in the dark.
More:
Best Buy-Out: The Numbers Don't Add Up
Source: http://finance.yahoo.com/blogs/breakout/does-best-buy-chance-survival-130251676.html
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