Best Buy US Stores on the Rise

Despite the recessionary environment, Best Buy’s (NYSE:BBY) store count in the U.S. has increased significantly in the past, from around from 742 in 2005 to 1,069 in 2009 [1]. Going forward, we expect the growth in the number of US stores to continue rising, though at a slower rate.

Best Buy competes with other major retailers like Wal-Mart (NYSE:WMT), Costco (NASDAQ:COST) and Radioshack (NYSE:RSH).

We estimate that Best Stores in US account for around 72% of Best Buy’s stock price. We currently have a Trefis price estimate of $41 for Best Buy’s stock, about 11% above the current market price of $37.

Number of Best Buy Stores refers to the number of retail stores operating in the U.S. under the Best Buy brand as well as some of its standalone stores (large retail format) that are integrated within Best Buy stores to provide a store-within-a-store experience.

Best Buy already has vast presence across the U.S., and hence the expected growth in number of stores is expected to slow. With slower rebound in economy, Best Buy will try to optimize its expansion plans rather than adopt an aggressive run to catch customers. The closure of Circuit City is a unique opportunity for Best Buy to woo Circuit City customers by offering competitive pricing on products.

The average of Trefis member forecasts for Number of US Best Buy Stores indicate an increase from 1,095 in 2010 to around 1,174 by 2016, compared to the baseline Trefis estimate of an increase from 1,104 in 2010 to 1,219 by the end of the Trefis forecast period. The member estimates imply a downside of 3% to the Trefis price estimate for Best Buy’s stock.

You can drag the forecast trend-line above to express your own view, and see the sensitivity of Best Buy’s stock to Number of US Best Buy Stores.

Our complete analysis for Best Buy’s stock is here.

Notes:
1. The number of Best Buy US stores is reported in the company’s SEC filings.