Best Buy saw its share price slip more than 15 percent this week despite posting its first quarterly same-store sales gain in two years. The reason the stock took a Wall Street hit was that Best Buy's quarterly profits were way down as the chain used heavily discounted items as well as the offer of free shipping on online orders to help it try and recapture lost market share.
Best Buy CEO Brian Dunn, according to reports, told analysts on a conference call, "Value is critically important to consumers right now and there's nothing more important to us than our customer franchise. So maintaining and growing that share in the places where there is growth is critically important to us because it sets up, and has historically set up, for us our strategies around connections and services and all the value-added things that we do better than anybody else."
While Mr. Dunn made the case for focusing on share (others including Amazon and Walmart have done so in the past), analysts questioned whether Best Buy and other retailers were on a slippery slope.
"I think Best Buy is the canary in the coal mine. I think we're going to hear retailers across all categories, with the exception of luxury, reporting depressed margin for the holiday time period," Joel Bines, managing director of AlixPartners, told Reuters.