Best Buy could close 200 stores (Update)

Originally published March 29, 2012

UPDATE: Best Buy says it'll cut costs - and improve service - which sounds doubtful:

Service "should be its advantage over online retailers," but the chain's latest plans to build more small Best Buy Mobile stores and service-incented Best Buy Connected stores, in the face of continuing big-box store shutdowns, look like "too little, too late," writes analyst Carol Levenson at Gimme Credit LLC.

"Closing 50 stores is a step in the right direction," and there may be more than 200 Best Buy closings "over the next few years," writes Janney Capital Markets' David Strasser, who admits he didn't see the company's latest sales decline coming.

Still, he notes, Best Buy is gaining market share online, and pressing's profit margins, as "shipping costs go up," TV sales profitability go down with prices, and "accessories are hard to sell on line." Advantage Best Buy, but it's still a shrinking business. Strasser notes with approval Best Buy plans to change to "a more incentive based pay structure," based not on commission but customer service goals to "spur good behavior."

Best Buy faces a "challenging 2013" with "weakening same-store sales and contracting margins" as TV, game and PC sales fall in competition with online retailers. "The only strength (is) coming from low margin mobie devices - smarptphones, tablets, e-readers," writes Dan Wewer at Ryamond James. "The consumer electronics industry needs a new product cycle." Well sure...

EARLIER: Minneapolis-based Best Buy Co. "plans to close 50 U.S. big box stores and open 100 small mobile locations" next year, reports AP here, citing the company's latest quarterly report.

More and more electronics shoppers are moving online, pushing "big box" chains like Best Buy into smaller, service-oriented locations instead of big warehouse showrooms. Retail analyst David Strasser at Janney Capital Markets predicted Best Buy closings last year, as I wrote here a year ago, and updated here in November.