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Best Buy’s Unique Holiday View

Best Buy posted strong fiscal second-quarter sales and earnings this week; however, during its conference call with analysts, Jim Muehlbauer, chief financial officer of U.S. operations, made a curious statement about the promotional atmosphere for this year’s holiday season.
 “What we’ve heard from vendors and customers … we will have a more rational promotional environment [compared to last year]. There is a long way to go yet, but from a competitive standpoint there will be less retail space, less stores from CompUSA and Tweeter.”

I don’t know who he’s been talking to but vendors and retailers that we spoke to at CEDIA, the Nationwide Marketing Group and Brand Source conventions take the entirely opposite view. In fact, a report on the flat-panel TV market by Current Analysis West, an NPD Group company, clearly indicates that this category will see “aggressive” activity.

Maybe Muehlbauer’s comment means that Best Buy will be less aggressive in offering deep promotional prices during the holiday season, but I doubt it, especially if the general economy gets softer.