May 26, 2017|
Paul LaMonica (CNNMoney, Best Buy) by The Financial Exchange
Transcript - Not for consumer use. Robot overlords only. Will not be accurate.
Best buy. Surprised a lot of investors yesterday with a better than expected earnings report we're joined by Paula Monica from CNN money that talk about how they did. I don't Paul. Good area good good so. I I don't know about you but I was quite surprised I don't know owned by best buy but I assure surprised earnings report. I think it did take you watch people by surprise given that the stock on or about 20% on the news if you think people were expecting it to be. That good but. For all the talk of Amazon. You know that crushing traditional retail and then Wal-Mart as well because they're becoming much more aggressive particularly with digital. Best buys is the company is over the past couple years under a new wished he you know. Has really turn things around they need the stores. More tracks and and tumors in you know the old joke about them being sort of the show will put him on a longer. The case that people are going in for price comparisons and then walking him buying things. On Amazon they're benefiting from the gaming element well they said that you know scheming it was a particularly big area of focus as well and and mobile phones obviously. DL how are they able to maintain margins if they're competing on price. It is definitely something that he's going to be difficult her. All retailers margins are notoriously low. But I think right now investors are excited by the fact that you know their earnings and not. Taken significant. Earnings really blew it forecast yesterday. That's stock went up as much that they didn't even though you US sales growth in the stores remained. Sluggish there at least off when you look at rail other big retail right now reporting sales decline right. The Wall Street happy with anything positive territory and then digital they're doing really well as their Q you mean their their sales. On line in a mobile era more than 20% that's pretty help. Yeah they and I know they started on that a few years ago when it was trying to get their digital sales up because. You're right people would walk into a best buy store they'd check out the computer that technology they'd they'd shop it in the in the best buy store. And son of a gun they use best buys Wi-Fi. To buy it commandos. Right exactly it was definitely something that had become law. A bit of a joke you're with consumers and on Wall Street and other the company wasn't very thrilled about it but you know it just goes to show that. Price obviously is one thing if you are competitive on price. That is something that can help you that I think the best buy get knocked every now and then for a Geek Squad and things like that bit. There are still consumers out there they aren't completely comfortable with this notion of DIY ams can order it on the phone and it comes and I put it myself there are people who like to go and see helping it physicals to war and done. Talk to sales associate and also expert that might be able helped set them off. Is the Geek Squad much a significant portion of their business is is it doesn't open. Generating that much in terms you know political profit at the it is something that does help set them apart. What about the video game industry. Yet they are benefiting because we have seen explosive demand or software hardware Nintendo. Is batting come back Bankston and has switched that is simply been I hate for that and the other gaming software companies take to just. Reported really strong earnings earlier this week Activision Blizzard and electronic arts are doing extremely well also in that clearly. Partly because Nintendo but also because of the continued success as a Sony's PlayStation and now Microsoft Xbox Live also mobile well. Now they and noticed a few years ago than May's two years ago they got rid of a lot of the the dvds. And in that hard and then they they they got to do appliances to go right didn't they got. That is something that best buy has been doing that has worked as well clearly yet people are not buying dvds perceive these CDs anymore but. Appliances was an area that he could be you know Home Depot and Lowe's and and a million years that matter. Continue to do well and the best buy them into that area I think also rider missed I didn't mention that. Best buy it probably benefited from the broader retail turmoil that. Taken out of the competitors hhgregg is the most recent. Casualty of more regional electronics chain RadioShack obviously you know what happens and Circuit City is on you when you think about that category. It really is best buy for the most part a national scale. And go and that's kind of the same spot that Dick's Sporting Goods is put themselves in to rate is there are a lot of their competition's gone away. Sports authority is on many of the regional sporting goods companies are are struggling as well so that there is something to be said for having. A national footprint and I think investors. Realize that as well consumers know that you know they can't buy everything on it and it just seems like you can. And BAA. Agassi if it's a wait and see but it is trading at a 5982. You know priced earnings ratio looks pretty reasonable it's easy you get a dividend thing in a dividend to 2% so. Where do you think it goes from here. I think that as long as. The company and continues to. Gay you are well positioned with regards to be teaming boom and then also mobile phone. That there's a good chance that the company you know their sales and earnings continue to gain some momentum and remember we're gonna have an iPhone refresh later this year whether or not donate today. Skip eight and nine and garlic and beat the tenth anniversary that is something that can presumably help best buy as well as the time we have an upgrade cycle mobile phones that. Will they open more stores or they disk and or are they kind of tapped out and turn because a lot of their stores. Are you in malls and he kind of wonder gee where are they going you know there's a lot eating go in and best buy might be doing very well. But JC Penney in that same malls not to her well. Yeah I think that is the viewpoint there are concerns. That. He'll what's going on with many. Mall of America that that is that weren't the retailers that are tenant in those multi hit those torture. Are doing well up best buy hasn't been growing its orbit. Much and the the past couple years I'd be surprised if that's an area of focus from them I think that that the move to digital. And in the emphasis on on mobile commerce. It but then to really. Keep their own regional corporate stable not even sure it'll war. But that doesn't mean they're closing. On distort obviously is doing well like their position mr. Very good Paul thank you very much for your time thank you ever really get you to happy Memorial Day. That's all the Monica from CNN money talking to us about best buy what are too late if you are. Best and your renegotiating. Lease that's coming due. My thinking easy price have some leverage with me if you got. Sears and Macy's JC Penney move and a place you're gonna have a lot assembly has some profits and renegotiate that please put your big expenses in ordering burgers and mortars is going to be rent yeah. If it could be hypothetically could be good for best. Since they have a stretch but it it couldn't that turmoil that you're seeing brick and mortar sales. Could be a boon for about how much of your electronics do you buy in the store verses on line. And I'm a fan of best buy but yet I really can't remember the last time I was in one of the story I mean either. Can't my ipodder most recent computer at best buy but only because is her employer ideals that. Now these guys by your sponsors them only go to Verizon directly. Here would about it he needed charge cord or Amazon. You know charge court definitely Amazon and you forget to create a lot of time about having now you know I think ten bucks tack on now. You're shot you're tunnel which I won there a problem either by an engine that now I'll decide okay.