Best Buy gains market share while seeing declining sales in December

Best Buy, Inc. (NYSE: BBY) warned of a disastrous holiday retail season before it occurred, even with bankrupt competitor Circuit City Stores, Inc closing stores and having survival issues. Wal-Mart Stores, Inc. (NYSE: WMT) by far was Best Buy's worst nightmare over the holidays, gaining same-store sales growth and being about the only retailer that was growing while all the others were shrinking.

With Best Buy set to report December earnings this Friday, many eyes will be on the retailer to see just how bad or good it performed over the holiday selling season. Stifel Nicolaus analyst David Schick believes that a 6.5% drop in same-store sales is on tap for the December quarter for Best Buy, which would be in line with the retailer's own doom and gloom predictions. However, Schick also thinks that there will be an uptick in December's numbers based on Best Buy's grasp of market share from the faltering Circuit City.

Schick notes that the rapidly falling prices in flat-screen televisions has hurt Best Buy, along with "the largest drop in durable goods spending since 1942." Best Buy still, though, has most of the market for consumer electronics outside from the mass discount retailer scene. There is generally not much national competition for the retailer outside the warehouse clubs that sell specific product categories of electronics, and of course Wal-Mart. Still, when consumers start spending money again, Best Buy will probably rise mightily from the ashes.