BBY - Best Buy

[Cardboard]

Unfortunately, I never participated in this incredible turnaround. What it tells me also is that there will be bricks and mortar survivors and that Amazon will never be profitable under its current business model. I will repeat again, never! Once Wall Street realizes that, they will demand profits from Bezos and once they see that he cannot increase prices, the stock will collapse.

 

Cardboard

[hyten1]

one thing i found very interesting (not sure why i never realize it)

 

is that the "showrooming effect" can be a good thing!

 

 

for companies that want to create a brand and have control of their customers retail experience, they will need retail spaces to do that (in addition to online). this samsung and best buy is a create example (obviously doesn't apply to all companies/brand/products).

 

to some extend Microsoft store and apple store are the same phenomenon (want to control the retailing experience of thier customers)

 

why couldn't Microsoft just open store within a store inside best buy vs actually setting up retail store (obviously there are plus and minus to each)

 

this phenomenon is happening to JCP as well. joe fresh is a great example in the fashion space.

 

can't wait to see how everything turns out.

 

Question: which product/company would like to have more control over how their customer buy their stuff? instead having their product just mix in with everyone elses etc. Meaning which company/product would like to create a "showroom" for their product that they currently don't have?

 

 

hy

[ItsAValueTrap]

why couldn't Microsoft just open store within a store inside best buy vs actually setting up retail store (obviously there are plus and minus to each)

Apple products are sold in a wide variety of places:

Online / apple.com

Online / amazon.com

Apple store

"Table within a store" - In some retailers you can find an Apple table with only Apple products on it.

 

The Apple stores do not have the best prices, but they have ridiculous sales productivity.  It's several thousand dollars per square foot, versus a few hundred that JCP is doing.  They are also arguably good for the brand.  Because Apple gets to control everything about the store, they can offer a high level of customer service (their employees tend to be better paid) and the decor can be top notch.

 

Anyways, the branding and sales productivity of the Apple stores may be why Microsoft is copying them.  As is Blackberry and other companies.  Many manufacturers like Sony also have their own retail stores, long before Apple.  I think that the success of showrooming has been mixed.  Retail is very hard and most companies aren't good at it.

[siddharth18]

I believe there's much to be learned from the price movements of BBY. All this with the benefit of hindsight of course:

 

BBY is up significantly from early Jan lows (the nadir - when it was selling for around 3x owner's earnings). It's peculiar how sentiment and emotions (read - fear) so strongly corrupt rational judgement yet how fickle they are. It's the "permanence from the constancy of human nature" as Dr. Burry describes. As it turns out, in the middle of adversity, there indeed was an opportunity.

 

It took just less than 3 months for hopelessness to turn into hope and eventually optimism.

 

[xtreeq]

Schulze is selling shares

http://www.sec.gov/Archives/edgar/data/764478/000076447813000064/bby8-k8x26x13.htm

 

[rockket]

thoughts on how to value/anyone getting out at this point? bought into this based on risk/reward assymetry when it hit lows and looked very cheap with the takeout catalyst looming - honestly not sure how to value this anymore. may be selling soon..

[bmathews03]

it's one of the worst businesses around.  not worse than sears, but still horrible. 

[bmathews03]

thoughts on how to value/anyone getting out at this point? bought into this based on risk/reward assymetry when it hit lows and looked very cheap with the takeout catalyst looming - honestly not sure how to value this anymore. may be selling soon..

 

Ah yes... a tricky task.  Well, within 5-10 years, it will be worth $0 per share.  Meanwhile, anything could happen.  Should you get out now?  I don't know.  You rode it from $16 to $38, why not sell at $50 or $100... I don't really know... a tricky task indeed...

[DCG]

Down 30% this morning.

[Jurgis]

@KCLarkin: BBY thoughts here: Honestly, I don't know why they survived and prospered and how. Anecdotally, I have not bought anything from physical Best Buy forever. I've bought things from Best Buy online but only when they had prices cheaper than Amazon after all Amazon discounts/Prime perks/etc. Which does not seem to be great situation for company to be: they are picking the crumbs from Amazon table. But clearly from financial results and stock performance they did more than that. And I don't have answer to that part at all. As I said on your thread, maybe it was "last man standing" syndrome: with very few competitors left, BBY won the brick&mortar customers while doing OKish/so-so online. I'd have to look at their numbers, but I'm probably not interested enough to do a real deep analysis.

 

Edit: I took a glance at 10 year numbers on Morningstar. They look choppy and crappy. So, in short, I would not have invested and I would not invest. And I don't think they are doing great even though the stock has outperformed. Maybe it was a good investment for someone who did deep DD, but really not for me. (And that's mostly true for other Amazonable companies/areas that people discuss too).

 

Edit 2: Here's what Morningstar says about returns. It seems that you have to pick quite specific periods for large outperformance:

 

Total Return % (07/20/2017) 1-Year 3-Year 5-Year 10-Year 15-Year

BBY                                          73.64 24.47 26.64 2.99 7.74

S&P 500 TR USD                16.22 10.03 15.09 7.19 9.62

 

Best luck.

[tol1]

Has anyone an idea of what the EBITDA margins are for the services sales?