Best Buy Co. Inc. (NYSE: BBY) extended its Cyber Monday promotion for the entire week after Black Friday, and the online deals come to an end Saturday, December 5. According to some reports, the company’s online sales have been very well-received and customers are spending on big-screen TVs and wearables, among many other items.
When it reported earnings last month, Best Buy said it expects revenue to decline in the low single-digit range in the fourth quarter, with profit margins taking a hit of 25 to 45 basis points across the enterprise. And selling big-screen TVs and other gear at very low prices that are not distinctive is not likely to overcome the weak outlook.
Selling these consumer electronics products at these low prices hacks away at margins and drives promotional costs up because every retailer is likely to be offering deals with similar pricing. Winning in that kind of environment is difficult to do.
Saturday, the company is selling a 55-inch Samsung 1080p Smart HDTV for $580, around the same price as Sears, PC Richard & Son and other consumer electronics retailers.
Best Buy also advertises a 16GB iPhone 6s for $99.99 with a two-year Verizon or Sprint contract. But that’s the same price Apple is promoting for the same phone with a two-year contract from either Sprint or Verizon.
Saturday’s promotion also includes 25% off “select wearables technology.” Savings appear to range between $30 and $80 on fitness bands and watches from Garmin, Pebble, Huawei, Tom Tom, LG and Basis. A Garmin vivofit with a purple band is advertised at Best Buy for $49.99, the same advertised price as Wal-Mart and Groupon.
Best Buy offers free shipping on all online sales through the holiday season and also offers free store pickup. The company has a price match guarantee as well, but because there are so many retailers selling identical products at the same sale price, shoppers are going to have to dig extra hard to find a better price than Best Buy’s.
Best Buy gave the Thanksgiving shopping period a good shot. Will it be enough? We won’t know that until it reports earnings again in February. Stick around.
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