Sony: approximately 350 Best Buy locations will be reconfigured to include 400-square foot Sony (SNE) experience shops. Situated in the back of the stores, these shops will educate consumers navigating Best Buy's sales floor on why they need to upgrade to a 4K television from a 1080p and should also include a shiny, new Playstation 4 to serve as a living room entertainment hub before heading for the checkout. Sony will train the Best Buy blue shirts (what the company calls its employees).
Samsung: television and audio shops that have quite the modern feel will be opened in 500 Best Buy stores by the end of the summer. Similar to the Sony shops, Samsung will be showing its newest technologies in televisions and audio via trained blue shirts.
Am I surprised by Best Buy FINALLY striving to replace its unproductive, and confusing on the eye giant TV wall? Nope, I foreshadowed that development here in a post titled "Why the Truth on Best Buy's Giant TV Wall is on the Giant Wall" on my firm Belus Capital Advisors' homepage March 9. What, you think I get paid to sit behind a computer? Guess again, high quality research (in this example, on a retailer) is done by pondering the fundamental unknowns that could influence a company's stock price in the future, and then working contacts for legal intelligence.The market once again cheered the news of additional Best Buy shop openings (which will join new shops from Google (GOOG), Apple (AAPL - Get Report), and Microsoft (MSFT)), sending the stock to relative outperformance land compared to the Dow Jones Industrial Average and S&P 500 for the week-ended May 2. In the mind of the market, Best Buy's floor space reinvention puts it in a better position to combat the initiatives of Amazon (AMZN - Get Report), Walmart (WMT - Get Report), and Target (TGT - Get Report) to be ultra price competitive by offering an overall premium buying experience. Moreover, Best Buy is now inching towards at long last benefiting from the alleged upgrade cycle in TVs that has gone absent. All of this top line related activity gets married to a fresh round of structural cost removal by Best Buy that was articulated months earlier. Clearly, the market is not entirely off base with its guarded enthusiasm. So - the million dollar question, to buy or not to buy the stock? After all, buying a stock is rooted in its perceived future business prospects, and Best Buy does have a few new positives to consider. I think the company has one more tough-to-swallow quarter and guidance range to convey to the market that could present material risk to the stock. Such a view not only factors in observations on what consumers are splurging on after a harsh winter (clothes, sneakers, cosmetics, goods to repair storm-hit homes), but continued sluggish sales in PCs, tablets, and TVs, as well as in appliances (the reaffirmed FY14 outlooks by Whirlpool (WHR) and Electrolux on North American demand just didn't square with softer 1Q14 trends) due to months of slowing in the U.S. housing market. Keep in mind:
- According to IDC, PC sales fell 4.4% year over year in 1Q14, while tablet growth cooled to 3.9%.
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