Samsung will open 500 Samsung store-within-a-store set-ups at Best Buy stores, starting in May and ending this summer.
According to Deutsche Bank analyst Mike Baker, the partnership will improve ties between Best Buy and Samsung, while improving the retailer's store space for the hot-selling smartphone, tablet, Chromebook and flat screen products Samsung offers.
That store-in-store concept differs from the one currently in place with Apple, which simply quarantines iPhone, iPad and iMac products to their own part of Best Buy retail outlets. Samsung, in contrast, is putting its own workers and marketing spending to its store concept at Best Buy, whereas consumers still have to go to an Apple store for a full experience.
Piper Jaffray analyst Peter J. Keith wrote in an April 4 research note that Samsung won't be paying rent as part of its agreement with Best Buy.The comparison between Best Buy and Home Depot goes beyond profit margins and a service experience. Best Buy's turnaround may be aided by a housing market recovery that has already drove Home Depot's post crisis earnings expectations and the company's recent record high share prices. As real estate comes back to life and homeowners need to fill living rooms with requisite electronics such as flat screens for the first time since the housing bust, Best Buy may have a better shot at succeeding with novel store-in-store concepts than companies such as J.C. Penney. A late March report from the Commerce Department showed new home sales in January and February had their biggest two-month gain since the fall of 2008.
As Best Buy rolls out its Samsung store-in-store concepts, watch for consumer reactions to prove whether newly appointed chief executive Hubert Joly can revive the company's profitability and cash flows. Best Buy shares are the best performer in the S&P 500 with an over 120% 2013 gain, amid increased confidence in the company's turnaround strategy. Those stock price gains compare favorably to Home Depot, which is up over 13% year-to-date. Still, Best Buy shares have a long way to go. While the company's shares are off roughly 40% over the past five years, Home Depot shares have gained over 140%. For more on Best Buy's turnaround, see the company's false junk ratings foundation. Also see why the company is increasingly finding new life after the company's founder Richard Schulze ended six months of takeover negotiations without a formal offer and returned to the company's board of directors as a "chairman emeritus." -- Written by Antoine Gara in New York Follow @antoinegara
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