Bad Times At Best Buy ("Americans can no longer tap their homes for excess cash to buy toys")

[Amerigo Vespucci]

Best Buy seems like it should be the best-equipped electronics retailer to handle a difficult economic environment. The well-regarded company has the size and marketing savvy to get it through tough economic times, and it is betting that it will be able to do so. Investors, howver, took a shorter-term view and were thrown for a loop when the largest U.S. consumer electronics retailer announced on Friday that its fourth-quarter profits took a hit from the sagging economy.

Best Buy (nyse: BBY - news - people ) said its holiday sales were strong, but results fell off in January. Same-store sales rose 1.5% in December but will decline slightly in the company's fourth quarter, which ends March 1, Best Buy said.

"The macro-economic environment grew more challenging after the holidays," said interim Chief Financial Officer Jim Muehlbauer. "Our post-holiday results are not going to be what we originally expected." Best Buy now forecasts earnings ranging from $3.05 to $3.10 per share for its fourth quarter, down from previous guidance of $3.10 to $3.20. Analysts polled by Thomson Financial expected $3.16 per share.

American consumers seem to have entered a post-holiday funk in which they have stopped buying consumer electronics and other toys in the face of rising food and energy costs. With the housing market sliding and credit standards tightening, Americans can no longer tap their homes for excess cash through second mortgages and equity lines of credit. Wal-Mart Stores, the largest U.S. retailer, said last week that consumers were using gift cards received over the holidays to purchase food and other basics instead of more traditional gift items.

http://www.forbes.com/2008/02/15/bestbuy-electronics-retailer-markets-equity-cx_ra_0215markets24.html?feed=rss_news

[cornermouse]

1. Have you been to Best Buy lately?

I stopped doing my impulse buying in their store a few years ago when they designed what is more or less a gauntlet or cattle chute lined with with junk that they want you to put in the cart while you're waiting to get to the cash register. On my few trips in there since then, they've gotten rid of most of their computer games which was the #1 impulse buying that I was doing and although they have a lot of dvd's they're clearly moving toward those blue ray things which are more expensive, which are from a practical point of view, duplicate purchases which is a waste of money. The dvd's I can mostly get from other places with less hassle.

I look at their Sunday circulars, but I almost never go in the store any more.

[Amerigo Vespucci]

2. It's been a while...

...but there are still people with "disposable income" and an eagerness to spend it.

I went to Trader Joe's today to grab a bottle of wine so I could make linguine & clam sauce for dinner. The woman at the register across from me had to have had between $200 and $300 worth of stuff in her cart. It was all yuppie food, the tiny designer "personal pizzas" and stuff. I see it every time I go in there. There will be people with the red plastic hand-carry baskets with a few "treats" they're buying for themselves, and a few "haves and have mores"...Bush's favorite kind of people...looking like they are stocking up for the coming Apocalypse with overflowing carts filled with over-priced yuppie snacks.

[LeftCoast]

4. Just for an alternative perspective...

You could be describing me. I've got no kids. My partner and I make a good living. We both studied hard, went to grad school. He runs his own business and I'm an RN. I don't understand posts like yours. Are we supposed to live in sack-cloth and ashes and donate all our disposable income to those who have less disposable income? And why should our income have anything to do with why any of that would make us republicans.

[rzemanfl]

6. In class warfare some people end up where they don't want to

be. Rove and Bush don't give a shit that perfectly nice tolerant christians end up painted with the same brush as the whackjobs, that hardworking educated people are looked upon as being part of the robber baron "have mores" class, etc. it's all about the wedges. "One nation" means nothing to them.

I am sure there are plenty of Shia and Sunni who just want to get along, that doesn't mean that they don't end up in the Baghdad morgue with holes drilled in their heads.

[LeftCoast]

8. My point is we shouldn't be the ones painting everyone with the same brush

It doesn't reflect reality and it blinds you to potential allies from a strategic standpoint.

[rzemanfl]

14. True enough, but that would be cult-like thinking, now wouldn't

it? Hope? Screw that.

[JDPriestly]

7. Enjoy your prosperity while you can, but save as much as you can too.

You will need it. Money is actually a symbol for a social contract. I own something -- maybe my body which can do work (like the hands and feet and mind of an RN) or a tree that I can cut and sell for the lumber. I make a social contract to exchange my body, my physical and mental work, let's say for three hours to buy a certain amount of the lumber from the other guy's tree. I may never see the guy who owns the tree, but I have made that agreement.

If the guy who owns the tree can't sell his lumber because I haven't been able to sell my work and don't have that symbol for my work -- money. A contract cannot be entered into.

A lot of things can cause the social contract to break down. One is lack of trust. The Bush administration has refused to properly regulate business. One after the other, links in our social contract have broken due to dishonesty and greed: Enron cheated and went bankrupt. Now the mortgage business is in crisis. There is a euphoric feeling of wealth and invulnerability for a few people for a while. But when the break in the link that holds the social contract together is discovered, we realize that the feeling was an illusion, a fairy tale.

Another thing that has caused the social contract to break down is the fact that big business, with encouragement from our government in the form of tax breaks and treaties, has abandoned industrial infrastructure built here and invested the income earned here in markets in which the businesses can obtain cheaper labor. As a result, the average incomes of Americans in real terms have fallen. That means that Americans who used to earn good wages from their work are less capable of paying decent salaries to people like you who are RNs. Hence, the current panic over the cost of health insurance and health care. Either demand for your work must go down or you must earn less. It used to be that people simply nursed themselves at home with herbs and home remedies until they died. That could become a common practice again if the social contract that holds our health care system together falls apart.

You, the hardworking RN, certain that your skills are necessary to society, you are part of the social contract that links us all together. So is your husband. You are living well. But the only thing that guarantees that you will continue to live well is the social contract. It is in your interest to make sure that the contract is strong, that no link is broken beyond repair. That is why you are or should be a Democrat. The Democratic Party stands for strengthening and protecting the social contract.

In contrast, the Republican Party leaves it up to big business to enforce or ignore the social contract. Capital rules the Republican Party. Upholding the social contract rules the Democratic Party. Republicans trust the markets to heal and regulate themselves. Democrats want the government to enforce regulations that represent the social contract agreed to by the majority of the people.

Best Buy and Circuit City are about to find out just how important the enforcement of government regulations and rules is to their own financial success. We've had seven long years of "free market" little or no government regulation. It's time for us to elect a Democrat who will strengthen and enforce the social contract that holds the economy together.

[LeftCoast]

9. I agree with a lot of what you say

I think that the social contract is undergoing a lot of stress right now because society is moving from an industrial economy to an information economy. At the same time it may be moving into a post-oil economy as well. We're also at the tail end of a 30 year long period of conservative political dominance. We may be looking at an FDR - New Deal sort of political realignment coming soon. I've been reading posts by a very convincing Kossack on this subject lately.

[JDPriestly]

15. I don't believe in an "information" economy.

I don't eat information. Information is a luxury. It's like saying we are moving to a yacht economy. You can only have a information economy as long as you have the food, clothes, health care and heat and production of the equipment on which the information economy relies. People are just fooling themselves with the talk of an "information economy."

[Demagitator]

10. But do Dems or the Repukes regulate fair trade?

And is not money (actual cash) in and of itself becoming less valuable; and as a result of this, more and more -- power shifting -- in the financial and governmental institutions?

Think of money transferring not with cash; but by debit and credit cards, and gold going up in value.

Is not the -- knowledge -- about how the game works becoming even more valuable -- then cash itself?

[JDPriestly]

31. "knowledge about how the game works"

Most people think they have more "knowledge about how the game works" than they do. Those who pull the strings behind the stage are the only ones who "know" and they don't know enough.

Yes, money becomes more and more valuable. Resources become more scarce, and work becomes less valuable. Real property inevitably becomes more valuable although there are brief devaluations in real property values.

[Vektor]

11. You are describing me and my man to a tee.

He runs his own business, I'm an RN, we have no kids, and we are huge proponents of the "tiny personal yuppie pizzas" at Trader Joe's.

We do most of our shopping there and at Whole Foods, and sometimes Safeway for more traditional grocery items as there is one right down the street from us.

I also do not understand posts slamming a person for having a full cart - who is one to judge? Maybe the customer was doing all of her shopping for the entire week/s ahead. I give her Kudos for choosing a great company like Trader Joe's to buy all that stuff from. Why would someone hate on another person, and make awful judgments about them just because they were grocery shopping, and buying stuff they like?

Also, TJ's prices are good, and their food a nice break from the regular, run of the mill "traditional grocery store" fare.

Regarding sackcloth and ashes, I agree. We do give to charity, we do have an adopted mutt from an animal shelter, we do "share the wealth with those less fortunate," and we still have enough to actually buy a Trader Joe's Pizza when the craving strikes. We budget wisely, don't rack up tons of debt, and watch what we spend on non-essentials, as a result, we can afford to eat what we like. It's called being a responsible adult, and we, like you and your mate, and the lady in line at TJ's, hardly deserve criticism for it.

[LeftCoast]

21. We're even in the same area!

It would freak me out if we were coworkers! LOL

[Vektor]

24. I work in the South/East Bay...

If you are in S.F. proper, you probably work closer to the city?

[LeftCoast]

25. Yep, in SF

Makes for a really fast commute. Takes me about 15 mins to get to work.

[cap]

22. I tend to load my cart up with yuppie treats when they are on sale

they sit in my pantry and when times are tough and we don't go out and eat, I doll up my turkey meatloaf with niceties.

Unfortunately, there's an organic store going out of business in my area. But I do go there and get things that are good for us that I wouldnt buy ordinarily because they are too expensive.

I also search the clearance rack in the grocery store. Got several pounds of masa harina and refried beans.

[Missy Vixen]

33. Because anyone here with money in their pockets, at ALL, is morally suspect

>Why would someone hate on another person, and make awful judgments about them just because they were grocery shopping, and buying stuff they like?<

This happens over and over and over here, every damn day. No matter what it is, anyone here that has any money whatsoever to spend is morally suspect, and obviously a Republican as well. Don't mention the fact that you have anything at all, or be prepared to have the truck backed up on you by people you've never met who've made snap judgments about you, your life and your spending habits because you dared to go to Trader Joe's and buy a personal sized pizza to eat.

Considering the fact that TJ's is one of the least expensive grocery stores around, (and socially conscious to boot,) one would think it was laudable behavior to shop there, but then again, it's hard to say what's acceptable at DU anymore. I know I'm confused, because it changes every single day.

It's a good thing there are a few people here with a little money, or the site could not exist. This, of course, is never considered.

Julie

[Amerigo Vespucci]

18. Let's break this one down, point by point.

1). "You could be describing me" No, I'm not. I don't know you.

2). "I've got no kids" Good for you. I know yuppies with kids who still spend like drunken sailors on shore leave.

(please note: if any drunken sailors are reading this post, please do not reply with "so now you're attacking drunken sailors?" No, I'm not I was merely using it as an example. Have another drink and chill out).

3). "My partner and I make a good living" See response to #2 above.

4). "We both studied hard" So did I. So did a lot of people.

5). "went to grad school" Got me on that one. I didn't. But see #2 above anyway.

6). "He runs his own business" So do I.

7). "I'm an RN" A great profession. Congratulations.

8). "I don't understand posts like yours" To be great is to be misunderstood, so thanks for that. I knew I was great before you misunderstood me, now I feel somewhat...greater.

9). "Are we supposed to live in sack-cloth and ashes and donate all our disposable income to those who have less disposable income?" I'd spend some quite time contemplating the anger and attitude behind that statement. Some people donate to the less fortunate with income that is far from disposable, and I do it with a sense of joy, not resentment. Remember:

Every one of us is a very short distance from becoming one of "those who have less disposable income."

10). "And why should our income have anything to do with why any of that would make us republicans." OK, that's where you lost me, which resulted in my reciprocal "I don't understand posts like yours" comment.

So my apologies if you took what I said about a shopping experience in Trader Joe's to be a personal attack on you and your S.O., two people I don't know.

Whether I could have been describing you or not, I wasn't.

My suggestion is to put me on ignore. I won't take it personally.

[Deja Q]

19. .

:popcorn:

[XanaDUer]

30. Hmmmm

Sounds like me, too. And I buy lots of fruit, and I am glad I can afford it.

Single, no kids, master's degree, pretty good salary for a female.

Oh, well.

[Vektor]

13. It's unfair to judge so harshly over the lady's grocery items.

TJ's has great prices, and I give the woman kudos for choosing to shop at such a progressive company. Perhaps she is gainfully employed, budgets wisely, and does so to be able to afford the foods she likes. Maybe she just got her tax return today and decided to go out and get all her needed grocery items. Maybe she was having a party and was buying for several friends. Maybe she was buying all those pizzas and snacks to freeze, as those were her groceries for the coming weeks. Maybe she was buying for a large family.

Just because she was buying a lot of food does not mean she's one of "Bush's have more's". Maybe she's a liberal Democrat and a nice person who likes to shop at Trader Joe's just like you do.

You are making a lot of unfair assumptions about another person based on the items in her grocery cart when you don't know the whole story. How would you like to be judged like that?

I am sure some people who are living off of Ramen noodles would be real quick to point out what an elitist you are for buying a bottle of wine at a specialty store just so you could cook linguine and clams with it!

There is nothing wrong with either you, or her buying whatever you like to eat. It doesn't mean you are a Bush lover or a money waster, or a greedy jerk.

Please don't be so quick to judge and insult.

[lame54]

17. Trader Joe's overpriced?...

Next time don't head straight for the wine section and peruse the store - their prices are probably lower than any grocery store in your area.
By the way, isn't wine in your clam sauce a luxury? - you can make it w/o it.
Their white clam sauce is only $2.99

[SoCalDem]

32. I TRIED to buy a freezer from them..CASH in hand

and after the parade of know-nothing "clerks" wandered by, and no one seemed to know just who could/would/should help us, we went to the manager and told them why we would never shop there again..

This ordeal lasted about 45 minutes of "Wait here..someone will help you"..."Oh, you need Joe/Ed/Mary/Steve/Whoever:"..

What did the manager tell us?

"I'll send someone back to help you guys"..

we left.. and settled for the smaller freezer the local appliance store had.. ( I looked there first, but thought we needed a bigger one)..

They delivered it that same afternoon (free), carted the old one away, and the guys even helped me unload & reload the frozen stuff..

[Afje]

3. hehehe - they finally have wage-cut themselves

out of customers.

[Double T]

5. Yep. Fewer McMansions, fewer HUGE SUVs, fewer KING SIZE fast food meals,.........

and NOW fewer GIANT SCREEN TVs. What will the country built on EXCESSES do?

[CRF450]

23. Though I dont really like SUV's either, I love my 50" DLP TV.

[KharmaTrain]

12. And Where Is The Money Coming From Or Going To?

Ahhh for the glory days when one could throw $50 or $100 away on a toy...or throw that neat DVD player on the credit card or just hadda have that new Madonna CD. Instead that money went into gas tanks, higher interest payments, extra costs at the grocery and so on...meanwhile those who are still working are having to put in more hours just to break even. Any economist or business forecaster who didn't see this coming should never be allowed near a set of Quickbooks again.

[Deja Q]

16. That's okay. They're opening up in India.

http://www.marketwatch.com/news/story/best-buy-reportedly-talks-vivek/story.aspx?guid=%7BD1AA83B1-973B-4CB8-9487-C1CB691CE704%7D

See? Another American company saved and everyone else can still talk about America's comeuppance! :party:

BTW: :sarcasm: Anyone saying they want America's comeuppance is a body part. Guess which one?

[sarcasmo]

20. Kick and Rec. I hope this lack of borrowing money would slow the Consumerism down.

[dysfunctional press]

26. we bought an imac at best buy last month...

we had gotten a $500 gift card for best buy, and it seemed as good a use as any to put it toward getting a new computator.

[Zech Marquis]

27. toys???

I happen to be a DUer who works at Best Buy. I certainly don't regard people asking me to help find a machine that can record their old lp records to cd burners "toys" I don't regard anyone who wants to buy their kids a laptop for college wasting their money. And people who WANT to buy new tvs certainly get all of my professional attention. In fact, my store seems to keep getting busier. So I find the OP's tone a bit insulting for myself and my BB co-workers.

[Missy Vixen]

34. We were in a Best Buy shortly before Christmas

It was crowded, it was busy, but my husband needed a USB drive for his work computer, so off we went. Things went fine. The staff we spoke with were pleasant, seemed helpful, and we are no worse for wear.

Let's face it: I wonder sometimes if there are people here who've never left the utopia of Mom and Dad's basement.

Julie

[Tektonik]

28. fuck Best Buy

Terrible guest service, minimal product selection, AND high prices. I shop for electronics at Fry's.

[rucky]

29. I haven't set foot in a big-box store in years.

The whole experience creeps me out.

TigerDirect!