Will Best Buy Really Win Christmas Back From Amazon?

Best Buy will release its quarterly report on Tuesday, and investors have already declared victory over the company's brush with disaster, sending its stock up almost 300% year-to-date. But amid all the hype in Best Buy's recovery, it still has to prove that it has found a lasting solution to the challenge of Amazon.com and other rivals by finding ways to get its money's worth from its big-box retail investment.

A year ago, Best Buy looked as if it might go the way of former rival Circuit City, falling under the weight of high costs and online competition driving customers toward cheaper alternatives from Amazon and other Internet retailers. Since then, though, Best Buy has worked hard to find reasons for shoppers to visit its locations, particularly focusing on in-house mini-stores with partners Apple , Samsung, and Microsoft . But will those initiatives prove sufficient to boost Best Buy's earnings to match its share-price growth? Let's take an early look at what's been happening with Best Buy over the past quarter and what we're likely to see in its report.

Will Best Buy locations be crowded this holiday season? Source: Wikimedia Commons.

Stats on Best Buy

Source: Yahoo! Finance.

Will Best Buy earnings keep rising higher?
In recent months, analysts have boosted their views on Best Buy earnings substantially, with a $0.02 per share rise in October-quarter estimates looking sluggish compared to a nearly 15% jump in projections for the next fiscal year. The stock has continued its impressive run, rising 37% since mid-August.

Leading up to the current quarter, Best Buy had made progress, but it still had plenty of work to do. Best Buy's second-quarter results showed that the company has largely halted its decline, with same-store sales falling 0.6% globally and 0.4% in the domestic market. Strength in computers and phones as well as appliance sales has offset weakness in consumer electronics, but Best Buy has largely abandoned its once-strong position in selling media like videos and music CDs.

Yet some believe that Best Buy can stand up to Amazon and big-box rival Wal-Mart by making maximum use of its store locations. Offering in-store delivery for online purchases can often cut waiting time for customers to almost nothing, while price-matching promotions have eliminated the incentive for shoppers to look at products at Best Buy stores but then buy them online. The proliferation of popular mobile-device mini-stores has also created a buzz, with the Apple-Microsoft archrivalry especially making Best Buy a key battleground among the largest tech players.

One area where Best Buy refuses to get left behind is in shifting Black Friday to Thanksgiving Day. With plans to open at 6 p.m. on Thursday, Best Buy doesn't want to let any of its big-box competitors get the upper hand on the important holiday weekend. Given that Wal-Mart, Target, and other retailers are opening their doors earlier this year, that move could prove crucial in preserving Best Buy's recovery.

In the Best Buy report, watch closely for guidance on how the earliest part of the holiday-shopping season is going. As valuable as third-quarter results are in gauging the recovery, they'll be irrelevant if Best Buy can't execute during the holidays.

Will Amazon be Best Buy's ghost of Christmas future?
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The article Will Best Buy Really Win Christmas Back From Amazon? originally appeared on Fool.com.

Fool contributor Dan Caplinger owns shares of Apple. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Amazon.com and Apple. The Motley Fool owns shares of Amazon.com, Apple, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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