Tags: BBY | electronics | retailers | stocks

Best Buy Faces Tough Retail Headwinds

By    |   Monday, 08 Aug 2011 12:10 PM

Unlike in some other industries, consumer electronics so far has prospered from a slew of hot products, such as the popular Apple (AAPL) iPad and a bevy of newfangled cellular phones. As a result, electronics has bucked U.S. purse-tightening, rising 6 percent last year, according to the Consumer Electronics Association.

But there is a downside to this profitable niche: lots of rivals and ongoing price competition. And that’s what gives Best Buy (BBY) its headaches. The consumer electronics retailer, which has 1,099 stores, has notched steady cash flow and sales growth for many years. Analysts fear this year may be tougher than last, though: Best Buy’s fiscal first quarter revenues rose only 1 percent to $10.940 billion versus $10.8 billion a year ago. Same stores dipped 1.7 percent. Net income dropped 10 percent.

Still, the retailer has lots going for it. The company pays a 2.4 percent dividend. Also, it has already spent $505 million repurchasing common shares, and there’s $800 million left for more repurchases.

Best Buy’s biggest obstacle is how to spur new growth. Consumer electronics spending is forecast to slow down this year and some products already see sagging demand. Best Buy is expanding internationally and growing its online business to keep the engine primed.

Discounting pain

Several analysts see a rocky road ahead. Of the 25 followed by Thomson/First Call, just four have strong buy recommendations and five have buys, with 14 holds, one underperform and one sell.

Citigroup analysts rate Best Buy a sell, citing flat-panel television price discounting that could damage earnings. The company reports next in mid-September.

© 2017 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
Companies
Unlike in some other industries, consumer electronics so far has prospered from a slew of hot products, such as the popular Apple (AAPL) iPad and a bevy of newfangled cellular phones. As a result, electronics has bucked U.S. purse-tightening, rising 6 percent last year,...
BBY,electronics,retailers,stocks
264
2011-10-08
Monday, 08 Aug 2011 12:10 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved