Electronics retailer Best Buy Co. Inc. (NYSE: BBY) announced mediocre earnings and gave an even more mediocre forecast. It was one more example of how Amazon.com Inc. (NASDAQ: AMZN) has battered Best Buy and will continue to do so. (These companies have the worst reputations.)
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The first piece of evidence about Best Buy’s trouble is its stock price over five years compared to Amazon’s. Amazon is up 53% over the period, and the broader market is up 32%. Best Buy has dropped 3%. Best Buy’s market cap is $17 billion, while Amazon’s is $1.4 trillion.

The gulf between the two companies should not be so large. Best Buy’s revenue was $9.6 billion in the most recent quarter. Net income was $274 million. In Amazon’s most recent quarter, North American revenue was $82.5 billion, with an operating income of $3.2 billion. Granted, Amazon has the highly profitable and industry-leading AWS cloud business, but that is not enough to make up for the market cap spread.

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The difference between the two companies remains that Best Buy is a legacy brick-and-mortar retailer. It has stores, store costs and costs for people who work in its stores. E-commerce is not part of its success, nor has it ever been. The company will be shackled to this model permanently.

Best Buy also offered caution for the months ahead. It expects revenue to decline 7.1% on comparable sales that will fall 6.3%. Amazon will do better.

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