Sunday, August 30, 2015

Best Buy could close stores without warning: report

"It would only serve to scare vendors, landlords and employees" to announce store closings are on the way, says Janney's David Strasser

Best Buy could close stores without warning: report

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"We would like to see more thought put into [a] more aggressive store closure strategy" at Best Buy Corp., says Janney Capital Markets analyst David Strasser, after watching Best Buy shares sink below $29, down from $48 last Spring, on disappointing sales and a build-up of unsold personal computers and other inventory.

"But even if they did plan on closing stores, they would do that well before making it public. It would only serve to scare vendors, landlords and employees" to announce closings are on the way, Strasser adds.

Yet Strasser says investors have overreacted, and clients should buy, not sell, the stock at current prices: "The company is moving in the right direction" by investing in smart phones, tablet computers, and electronic commerce, as personal computer sales and profits fall.

Things at Best Buy looks worse to bond analyst Carol Levenson at Gimme Credit. "Sales slumped badly" as "television sales continue to plunge," and "higher mobile phone and tablet sales were not enough to offset the decline in notebook computers," she told clients in a note, citing figures for the Christmas season and since.

Best Buy nvested more than $1 billion last year buying back its own shares to prop up the stock - half with borrowed money - and may do it again this year. Since Best Buy's own projections call for a "fourth straight year of flattish to down sales" at a time when most retailers are growing again, Levenson is warning bond buyers to stay away.

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About this blog

PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com, distefano251@gmail.com, 215.854.5194 or 302.652.2004.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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