Elsewhere, it doesn't seem as if Best Buy's management has figured out ways to keep Amazon and Wal-Mart from picking off its electronics business, which was down roughly 12% this quarter despite improvements in merchandising and showroom advancement. Although areas such as appliances and phones posted growth of 12% and 8%, respectively, these were negated by a 17% decline in entertainment. I really want to like Best Buy again, especially after seeing all of these efforts. Plus I've been wrong in the past. But the eroding margins are still discouraging. Gross margin shed 180 basis points while operating margin declined by 70 basis points to 1.8%. Although this was still enough to beat estimates, the 36% decline in operating income still stood out like a sore thumb.
The Street seems encouraged that the company is on the right path. Plus it does appear as if customers are responding well to Best Buy's "price match" guarantees. To the extent the Samsung partnership can help boost against Wal-Mart, Best Buy may benefit from some incremental traffic. But I'm not expecting this will completely erase the disadvantage against Amazon's online presence. In that regard, these initiatives, while improved, have failed to boost comps to the level that management expected. But if not now, when? Accordingly, I believe the best way to play Best Buy is for investors to take more of a cautiously optimism approach, especially with the gigantic leap that the stock has already experienced. Should the stock fall 20% to, say, $22 per share, then that's an entirely different discussion. For now, it's best to lock in your profits and not look back. At the time of publication the author had a position in any AAPL. Follow @saintssense This article was written by an independent contributor, separate from TheStreet's regular news coverage.