Can GameStop Pick Up Where Best Buy Left Off?

By Chris Lange Updated Jan 12, 2:51AM EST · Published Mar 1, 1:35PM EST

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Can GameStop Pick Up Where Best Buy Left Off? — © Thinkstock

Best Buy Co. Inc. (NYSE: BBY) announced its most recent quarterly results early on Thursday, as well as a stunning update. The electronics retailer has decided that it will be closing all of its mobile phone stores, which may be a prudent move on its part, but this could be a big opportunity for the likes of GameStop Corp. (NYSE: GME) to clean up in this field.

Ultimately, Best Buy announced that it intends to close all of its 257 remaining Best Buy Mobile stand-alone stores in the United States by May 31, 2018.

This decision is the result of changing economics in the mobile industry since Best Buy began opening these stores in 2006, along with the integration of its mobile model into its core stores and online channel, which are today more economically compelling.

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According to an SEC filing the firm put out:

The costs of implementing these changes primarily consist of costs related to termination of store leases. Best Buy expects to incur total pre-tax restructuring charges in the range of $55 to $65 million, which equates to diluted earnings per share of approximately $0.14 to $0.17. Best Buy expects that the majority of these charges will be recorded in the first quarter of fiscal 2019. The expected total charges include between $53 and $63 million of cash payments – primarily related to the termination of store leases – that will be paid over the next year.

On the other hand, this leaves ample room for GameStop to swoop in and win some market share with its mobile retail businesses.

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Out of GameStop’s 7,200 stores, its Technology Brands segment includes nearly 1,400 Spring Mobile AT&T and Simply Mac stores. Spring Mobile sells all of AT&T’s products and services, including DirecTV, devices and related accessories in select markets in the United States. Simply Mac sells the full line of Apple products, including laptops, tablets and smartphones, and it offers Apple-certified warranty and repair services.

As a result, shares of GameStop were last seen up about 2% at $16.01, with a consensus analyst price target of $20.40 and a 52-week range of $15.10 to $25.32.

Best Buy traded up about 4.5% at $75.67 a share. The stock has a 52-week range of $42.22 to $78.59 and a consensus price target of $69.54.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.