Why Best Buy's Appliance Sales Can't Keep Up With Rivals

In an era where brick-and-mortar retailers are struggling to maintain their footing amid the rapid rise of e-commerce giants, Best Buy Co., Inc.‘s (NYSE:BBY) recent downgrade by Piper Sandler highlights the ongoing challenges faced by traditional electronics retailers.

The Best Buy Analyst: Analyst Peter Keith downgraded the rating from Overweight to Neutral, while reducing the price target from $82 to $75.

The Best Buy Thesis: While there is consumer awareness about the Windows 10 End of Life in October, this may not drive PC demand, Keith said in the downgrade note.

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Microsoft Corp (NASDAQ:MSFT) provides instructions on how users can upgrade from Windows 10 to Windows 11 for free and several PC manufacturers have indicated that upgrades are already taking place, he added.

Best Buy's appliance sales have "significantly underperformed" those of Home Depot Inc. (NYSE:HD) and Lowe’s Companies Inc. (NYSE:LOW) over the past three years, and Costco Wholesale Corp (NASDAQ:COST) has become "more aggressive on appliance services," the analyst wrote.

Best Buy's Consumer Electronics category has comped -10% over the past six years, underscoring a lack of innovation—especially in TVs. The analyst notes that Walmart's (NYSE:WMT) recent acquisition of Vizio could further disrupt the market, as the company leverages high-margin Retail Media revenue from Vizio's growing install base to subsidize TV sales, potentially selling units at a loss or even offering them free to new Walmart+ members.

BBY Price Action: Best Buy Co shares were down 3.08% at $69.58 at the time of publication on Monday, according to Benzinga Pro.

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