Retail Renaissance Revolt: Best Buy Plunges As Top Line Misses, Cuts Forecast, Comp Stores Down And Sees Pervasive Weakness

Tyler Durden's picture

Is the retail revolution over? Best Buy, which was seen by many as the best indicator of retail hunger for all sorts of irrelevant Made in China Gizmos is plunging in pre-market trading, now down over 10%, after the company announces a massive top line miss of $11.89 billion in Q3 revenue on expectations of $12.45 billion. We can't remember when a retailer had a nearly 5% miss in top line, and is certainly a major cause of concern for not only the retail renaissance but for... Apple, for whom the store is the second biggest seller. Some other horrendous data points: Q3 comp sales down 3.3%; domestic Q3 comp sales down 5.0%, the company sees year EPS USD 3.20-3.40, saw USD 3.55-3.70, vs. Exp. USD 3.59, and notes domestic sales were softer than expected (as if it wasn't obvious). Broader market futures are also moving lower on the news that the market has managed to extract as much as it could out of a consumer base that is no longer paying its mortgages. Incidentally, how this could be a surprise is stunning: on October 31 we wrote that "TV pricing bloodbath threatens already razor-thin retailer margins" - of course, what is obvious to some, is completely opaque to the robots who only focus on positive headlines news. Perhaps a number for RenTec to tweak that algo a little?

And, as always happens when reality strikes, here is another sellside analyst whose opinion is now completely irrelevant. Meet Oppenheimer's Brian Nagel.

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Aknownymouse's picture


Aknownymouse's picture

Also for additional comic relief.  This Kramer's take on BBY BEFORE earnings:


Best Buy (BBY) reports on Tuesday. Cramer expects the company to beat estimates and raise guidance as it did in the previous quarter. Corning's (GLW) bullish comments on large screen TV sales are a good tell for Best Buy.

Rick64's picture

 Cramer expects the company to beat estimates and raise guidance as it did in the previous quarter

Thats the best short indicator of all.

Meanwhile GM trying to get rid of 2400 workers and Yahoo looking to layoff 5% of its workforce. 

101 years and counting's picture

TJX going to layoff 4,400 people.  They used to wait until after xmas and new years to lay off people.  not anymore.  as people like to proclaim:  welcome to the new normal.

DosZap's picture

This is not uncommon, been happening as long as I can remember.

Companies wonder why people LOSE it, and go on rampages.Well here is one reason, do it at the most illogical time of the year.

When employees NEED money for Xmas, and Thanksgiving, lordy, talk about depression,anxiety, and anger.

And, the thought of finding new employment in winter, and in a Depression to boot.

Its ALL about the bottom line.

trav7777's picture

best bet is to opt out of the commercial Xmas.

Also, every laid off worker needs to understand that their former salary is to be divided up amongst the execs earning 200x what they used to make.

Execs make their own bonuses out of the salaries of former rank-and-file.

Vergeltung's picture

that's funny. why would someone junk that? I don't get this place sometimes......

papaswamp's picture

I'm sure this will be seen as another 'fluke'....all is well rally on.

Unnoticed by the market is the Asian sector is beginning to crumble..Australia and Japan with ugly numbers.

Sophist Economicus's picture

But, but, but Harry says retail is booming and he's hiring 9 people in Wisconsin....

jus_lite_reading's picture

Hairy Wanker sells homemade porn, of his mother. Hot stocking stuffer you know.

putbuyer's picture

LULU looks like a good short here

Spitzer's picture

Anyone who is dumb enough to own retail deserves a beat down.

Dapper Dan's picture

With Circuit City out of the way I really thought Best Buy would do very well this year.

Things  aren't like they were, that is an understatement, and I am unanimous In that.

RockyRacoon's picture

Is there really all that much that you can/could get at Circuit City and Best Buy that you can't get at Walmart or Target?  Really?  I've been to Best Buy a bunch and there isn't much I want of a specialty nature that's not available by internet sales sites.   All that crap is pretty much generic now.

Cdad's picture

Curiously, and after sensing that I was going to be more lucid today having slept well with visions of PE compression and non GAAP accounting dancing in my head, my post as such disappears into the same thin air where all of Best Buy's earnings also obviously went.  So either I am not well again, or something technological just happened that is very interesting but, again, is beyond my power to explain.  But never mind about that because I have a hard time explaining lots of things.

I was saying that CNBC, despite constant Black Friday Madness programing was, curiously enough, wrong again about retail sales.  Oddly enough, and despite endless replays of Black Friday trampling from 2006, folk just could not pony up for $1000 televisions at BBY.  Shocking!  Something about buying food instead, I expect.

But worry not indexers because I do expect talking heads to suggest that both gold and silver are the S&Ps bff...which is good because Mr. Market has already seemingly figured out [finally] that oil is most certainly NOT the S&Ps bff.

Good luck out there.  I'm sure people smarter than me will have a good spin for what plunging share prices really means for BBY.

[and presto...there you go...."more share" and already this is an "outlier."  Thank the lord for the criminal syndicate known as Wall Street and its perpetually counter intuitive responses to everything.]

Cursive's picture

Oddly enough, and despite endless replays of Black Friday trampling from 2006, folk just could not pony up for $1000 televisions at BBY.  Shocking!  Something about buying food instead, I expect.

I was at the Mall of Louisiana this weekend and was shocked at how sparse the crowds were.  This was from 11 AM to 1 PM and the Saints game was a 3 PM start.  Of those walking around, I saw very few bags.  And the shelves were full of merchandise.  Of course, 87 octane ranging from $2.89 to $2.99 a gallon may have put a crimp on some people's discretionary spending.

HelluvaEngineer's picture

Exactly.  I've seen a lot of people at stores lately but very little buying.  Perhaps the unemployed are taking their kids to Walmart to play with the toys.

Cdad's picture

You have to learn to look on the Wall Street side of things...which is to say that just as soon as people start starving and freezing to death this winter, lower retail sales will result in less demand for products which will result in lower prices.

Unfortunately, and because the criminal syndicate known as Wall Street responds counter intuitively to EVERYTHING [arbitraging to death every single thing on the surface of the planet], prices will first spike with hyperinflation despite the death rate and fewer consumers...

But we'll all get through it together.  Don't buy a mason jars.

ElvisDog's picture

Explain to me how hyperinflation occurs with stagnant wages and rampant unemployment. How exactly do I get the $1 billion dollar bill to buy that egg I've had my eye on.

jus_lite_reading's picture

The same as we get "green shoots" and a "jobless recovery" with 25% unemployment, that's how.

Waterfallsparkles's picture

Probably at Walmart just to stay somewhere warm.  I know I just spent $305. for one month of Heating Oil and I have a small House.  That $305. will put a crimp in my spending this Holiday.

countryboy42's picture

I was at Gander Mountain on Sun. While waiting for my back ground check to be completed, I walked around observing other shoppers. Most people were looking at guns and buying ammo. Very few people were looking at clothes.

20 min. later, I walked out with my new Rock River Arms LAR-15 and a new O/U Stoeger Condor 12 guage shotgun. At least I can hunt, until they try to clamp down on that.

Buy bulk when you can. I am going to harvest a bison next month, and spliting it with 2 other people. $200 for my share which will give me 200# of meat. $1 per pound! Yeah, I gotta process it, but so what? Between the 2 antalope I shot, the bison, and pheasant hunting, I won't have to go to the store for meat this year. Grow some veggies, can the extra, and I am set for the year, sorta.

Good luck out there, and keep your powder dry.

SilverRhino's picture

Got a link or contact info for that buffalo rancher?   Enquiring minds and such.  

countryboy42's picture

Friend of a friend of a friend near Fairplay, CO. 1 yr. old cow for $600-$700 plus $50 to skin and quarter it. You even get to keep the robe, but it costs to have it tanned. I might keep it though, might have to start building teepees soon.

If I get more info soon, i'll post it. Not sure how many animals they harvest each year, so i'll ask.

Keep your powder dry.

SilverRhino's picture

Thanks.  Sounds something like these guys. 

I LOVE buffalo meat if only for the fact that it is twice as filling so that 16oz bison steak will put you in a nice meat coma.  :)

A Man without Qualities's picture

Over in Germany this year is very unusual.  Many high end retailers already starting their January sales 2 weeks before Christmas, but the sale discounts are much larger than normal, with 50% off not uncommon, whereas usually 20 - 30% off is as much as can be hoped for.


RunningMan's picture

I was at my local mall (for a haircut, mind you), and the retailers said lower foot traffic and much lower sales relative to last year. I've straw polled them for several years just out of curiousity, and the feedback has correlated well with holiday sales.

Almost Solvent's picture

I was in our local Best Buy last week to pick up our Christmas present (DINK household so we splurged on a $999 55" 1080p Panasonic plasma).


I ordered online to get my UPromise credit and picked it up. What I saw on Sunday 12/5 around 3pm was 4 empty checkout lines, but standing room only for the 2 return lines.


There must have been 20 people in the 2 return lines and I counted only 3 people buying things during the 20 minutes it took to get my TV. And those 3 people were buying little items, not big screen TVs.

ElvisDog's picture

I think we need to consider that, like housing, big screen TV's may have reached saturation. Everyone who wanted one or could afford one already has one. Retailers may be faced with a replacement-only dynamic that means flat to slightly increasing sales.

TruthInSunshine's picture

Lots of Tiffany bags on 5th Avenue, and few Best Buy bags on Main Street?

Things are only truly restructured with a bang, not a whimper.

And I've yet to hear Bang Dat-Hoe's drum.

Biggus Dickus Jr.'s picture

Other sales channels are stealing market share. Big box electronics will go the way of the dodo. Their profit always depended on selling expensive insurance policies.

RKDS's picture

Big box electronics are a joke anymore.

One upon a time, you went to these specialty stores to find stuff KMart didn't have room to carry.  Now they have about the same lousy selection with a 10% markup to boot.  The internet isn't killing them, this is willfull suicide as far as I'm concerned.

I tell you, I have no idea how Radio Shack holds on.  They didn't even have computer hard drive screws the last time I was in there.  Half the store is the same damned phones I can get from my carrier at contract renewal.  I ended up paying $5 to ship $1 worth of screws from a NewEgg warehouse in NJ.

I really try to cut B&M some slack but as gas prices rise ever higher I can't afford to keep driving around only to come home with nothing.

TruthInSunshine's picture

Sears Holding was Eddie Lampert's little stealth REIT, and now that commercial real property values plunged, and he can't sell the earth beneath his stores, he's working on Plan B or C.

RockyRacoon's picture

Our local Radio Shack just "remodeled".  Bad move.  All the tinkerer stuff is gone.  No rolls of wire, contacts, work boxes, solder/irons, resistors, capacitors, switches, etc.   They said I could get all that on their internet sales site.   I like to build/modify my own stuff but now I gotta find a more convenient source -- unlikely.

TruthInSunshine's picture

rocky - meritline has about 1000x the inventory of the gears, wire, switches and widgets RS ever dreamed of stocking, and at about 20% of the price or less.

Kromme Vinger's picture

Could this company's results be more adversely affected by forex mis management than most?

Aknownymouse's picture

CNBC: BBY results is an outlier.  So the Employment numbers were a one time event.  BBY numbers are outliers.  EVery bad news is an execption.  It looks like S&P will see an an outlier value of 200 soon.  One time event that means nothing at all.  Don't you worry.  CNBC SUX

Cdad's picture

Yep, we think alike.  Down is the new up.  Black is the new white.  And now we are supposed to buy buy buy...which is anything but what retail shoppers obviously did at Best Buy.

I get the feeling someone out there thinks I'm a sucker.  I'm not sure why they would think that, but they seem to.

I remain on guard, and I hope you do, too.


jus_lite_reading's picture

It's part of the "wealth effect"

There comes a time in an empire (EU/US/UK) when commercialism breaks down. No matter how much a person is made to believe that he "NEEDS" the latest thingamabob, whatever that might be, he simply can't buy it...

Game over.. notch 31

kridkrid's picture

For those who have opted out of watching the video... do yourself a favor and watch.  This fat-faced kid is playing a game of pretend.  It's kind of how my 5 year old like to play school, only I would say my 5 year old is a little bit better at it.  

The whole group was playing pretend, actually.  Let's pretend to play TV.  I'll be a host, you be an expert on electronic devices and retail.  Try not to look too fat!.  

jus_lite_reading's picture

He makes a  strong case: Never trust the anal-cysts.

kridkrid's picture

Likely even worse.  Right now fat face is thinking, "man... I can't believe how bad I missed that... I really thought I had it right when last week I walked into a Best Buy and saw someone buy a iPhone and another dude looking at a flat screen TV.  I am so totally screwed.  I'm sure I'll lose my job".  He shows up today and nothing has changed.  He even gets a compliment or two regarding his appearance.  He's too dumb to know what's going on.

By the way... anyone else getting blasted by Best Buy ads in this thread?  Too funny.

snowball777's picture

Sorry "Best" Buy...I had to spend it all on grains and gas.

jbc77's picture

Anyone surprised the the futures have barely moved lower on this news. Best Buy conitues to get hammered pre-market and the S&P is barely moving lower. What a fucking joke guys.

Cdad's picture

That is because gov't approved retail sales just came out and countered the BBY numbers.  And we all know how trustworthy gov't numbers are. what you will...which is exactly "I don't know."  Maybe stock up on Chunky Soup?