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Best Buy Inc. (NYSE: BBY) has been the subject of media speculation since the first quarter implosion of now-defunct retailer Circuit City. Billions of consumer electronics revenue dollars needed to go somewhere, after all. Based on Best Buy's most recent quarterly results, revenue dollars aren't just spilling into its coffers, even as the default market share gain from Circuit City went nuts last quarter. Will it continue?
All indications point to yes. Best Buy is the lone nationwide big-box consumer electronics retailer that is making all kinds of cutting-edge moves to remain relevant as its products and customers change. The theory around Best Buy's revenue drop in the last two quarters centers on more consumer electronics business going to mass retailer Wal-Mart Stores Inc. (NYSE: WMT), where customers have been taking refuge from the economic storm in the U.S. since last fall. Can Wal-Mart really compete head-to-head for dedicated consumer electronics customers once the money fog lifts as it is starting to do?
Best Buy's 22.3% industry market share of consumer electronics in the latest quarter means it has, in fact, capitalized on Circuit City's demise -- just not in revenue. Best Buy CFO Jim Muehlbauer said Tuesday that "We gained more share in the vast majority of our categories than any of our competitors." If only revenue could materialize at the same time.
Most likely, it will -- but not until 2010 as many aggressive programs at the retailer get into full play with customers.
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