Thanks for the comments. First of all, my BBY piece was not a recommendation to buy the stock. I made two points. One, that BBY stands to see an incremental benefit from the CC bankruptcy filing, and two, that the stock traded at a single digit P/E ratio.

The AP article you cited agrees with me on the first point, saying they are “likely to pick up market share.” That is exactly how an incremental benefit by getting some of CC’s customers would manifest itself. The fact that sales are down year-over-year does not refute that at all because all retailers are seeing sales declines. If BBY gains market share, their sales drops will be less severe than their competitors.

As for the stock, I am not a trader so even if I was buying the stock last week (I wasn’t) I would not care at all if it dropped a couple of points. For long term value investors like myself, I would tend to think a company like BBY would be a prime candidate for new retail exposure if one was so inclined, but given the economic backdrop currently, such an investment would need to have a long term time frame to be successful.

Here is an excerpt from Wednesday’s AP article on BBY:
On Monday, Best Buy’s largest rival, Circuit City Stores Inc., filed for Chapter 11 bankruptcy protection and said it was cutting more jobs than the thousands announced last week, citing eroding vendor confidence, decreased liquidity and the global economic crisis.

Earlier this week investors said Best Buy was poised to benefit from the collapse of its competitor and would be able to attract customers scared by the bankruptcy filing while reaping bigger sales in the coming months.

Now, experts said, there’s less chance for a short-term boost, even though the chain is still likely to pick up market share.

“I think the overall market has gotten a lot worse very quickly, so they haven’t had too much time to benefit from Circuit City’s struggles,” Lemos said.

Best Buy’s same-store sales, a closely watched retail industry metric, fell 7.6 percent in October. And same-store sales between November and February may plummet by 5 percent to 15 percent, the company said. That means annual same-store sales will slide between 1 percent to 8 percent.

Adding to the company’s woes is its increased international exposure, said Goldman Sachs analyst Matthew Fassler. International operations made up about 30 percent of revenue for the third quarter compared with 17 percent in the same quarter a year ago.

“The rapid appreciation in the dollar versus the euro, British pound, and Canadian dollar is pressuring international earnings,” Fassler wrote in a client note, adding that sales in Canada are declining as well.
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I agree with the 2 prior comments moreso than with your assessment. Hopefully, you didn’t act on your positive analysis and take a position in BBY. BBY’s stock performance since you praised it before the market open on Monday is already down 7.8% (as of the closing price on Thursday). A $2.00($25.59-$23.59) loss since last Friday’s closing price.

Regards,
Jeff

Those who think Best Buy will do well in Thanksgiving and Christmas sales will be disappointed. Best Buy is probably gaining market share because their sales are falling slower than competitors. I am looking to buy this stock but not right now, I’ll let others find the bottom for me.

BestBuy is indeed very well run, but will hardly benefit from the diminishing of a competitor it didn’t actually have.