Analyst: CE Weakness Hurting Best Buy, Costco13 May, 2009 By: Erik Gruenwedel
Ongoing plummeting sales in consumer electronics resulted in Pali Capital May 13 reaffirming its “sell” rating on Best Buy Co. stock.
April CE sales fell 12% compared to the same period a year ago and were 2.4% worse than last December when “the world seemed to be ending,” Pali analyst Stacey Widlitz wrote in a note.
Indeed, Costco Wholesale Corp. reported a 38% decline in TV sales in April, which contributed to a 6% monthly revenue decline to $5.18 billion from $5.54 billion last year. Wal-Mart’s March CE sales were down as well, according to Pali.
Best Buy, Wal-Mart and Costco are significant retailers of Blu-ray players and movies.
Widlitz said Best Buy had successfully assumed about 30% of shuttered Circuit City’s customer base, which she added might not be enough to offset environmental factors.
“We think it is not unlikely that [Best Buy’s] domestic business could be down [nearly 10%] in fiscal year 2010,” Widlitz wrote.