Why Best Buy Shares Tumbled

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of electronics retailer Best Buy (NYSE: BBY  ) fell 10% today, on a number of factors because the future looks increasingly bleak for the big-box chain.

So what: With Best Buy set to deliver earnings next Tuesday, investors seem to already sense that the quarter was a stinker. Fellow big-box chain Sears (Nasdaq: SHLD  ) fell 19%, after it badly missed the mark on its earnings report last night, and Best Buy shareholders seemed unhappy with a five-point turnaround plan announced by CEO Hubert Joly earlier in the week. The new plan was mostly boilerplate, offering bland and recycled ideas.

Now what: The cries of "Mayday" may not have begun just yet, but this is a sinking ship. Poor management has bungled an already tenuous position as a brick-and-mortar chain in the sights of Amazon.com, and management still seems clueless about how to reinvent the brand and energize sales. Analysts are expecting a profit of just $0.12 a share, down from the $0.47 cents a year ago. If profits keep moving in that direction, it could soon be lights out for the superstore chain.

Need to keep your eye on Best Buy. Add the company to your Watchlist by clicking right here.


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