Slower Growth for Best Buy’s US Store Count
Best Buy’s (NYSE:BBY) stock is highly dependent on the future number of US stores that Best Buy has, which is hinged on how effectively the company can compete with larger retailers like Wal-Mart (NYSE:WMT) and Costco (NASDAQ:COST). We currently have a Trefis price estimate of $42 for Best Buy’s stock, about 29% above the current market price of $32.
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In the past, Number of US Best Buy Stores has increased from 742 in 2005 to 1,069 in 2009. Best Buy has benefited from the bankruptcy of US electronics retailer Circuit City, but the company’s nationwide presence will make it harder for it to expand without cannibalizing existing store sales. We expect store count to continue increasing, but at a slower rate than in the past.
The average of forecasts for Number of US Stores created by Trefis members indicated a projected increase from 1,096 in 2010 to 1,202 by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from 1,099 in 2010 to 1,214 by the end of the Trefis forecast period. The member estimates imply a downside of 1% to the Trefis price estimate for Best Buy’s stock.
What do you think? You can drag the forecast trend-line above to express your own view, and see the sensitivity of Best Buy’s stock to Number of US Stores.