Is Best Buy Watching RadioShack Today?
Did RadioShack (NYS: RSH) bulls miss the memo?
The small-box retailer of mobile gear and consumer electronics gadgetry saw its stock shed more than 10% of its value at open this morning after posting disappointing quarterly results. Reports that this morning's quarterly loss was "unexpected" really only apply to slow-footed analysts and doe-eyed optimists.
It was easy to see that RadioShack was a big fat mess three months ago. Why should things be any different now?
Sales fell, even though it increased its focus on mobile products and opened 610 smaller mobile-centric stores over the past year inside Target (NYS: TGT) department stores. Margins got clobbered.
Best Buy (NYS: BBY) investors had better hope the company is taking notes. After all, focusing on mobile and opening up smaller Best Buy Mobile shops also seems to be the plan for the consumer electronics giant.
As it tries to smoke out a new CEO, maybe the company will drum up a strategy that doesn't involve following another company down a hole.
"If you've seen RadioShack's crumbling share price and margins, you already know why this is a bad idea," I wrote a week ago.
Surely copying RadioShack makes even less sense now that the share price and margins continue to be eroded.
Maybe there isn't a way out for Best Buy. It has the financial fortitude to last a few years, but maybe this will be a gradual fade into oblivion. However, as long as Best Buy has the financial resources to dream up a way out, it has better things to do than to follow RadioShack on its way to the bottom.
"Best Buy" is anything but
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At the time this article was published The Motley Fool owns shares of Best Buy and RadioShack. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.