Best Buy same-store sales seen down again

By Dhanya Skariachan

NEW YORK (Reuters) - Best Buy Co Inc <BBY.N> is poised to report its fourth straight quarter of same-store sales declines on weakness in its television business on Tuesday.

The biggest U.S. consumer electronics chain also faces tough comparisons in the seasonally weak first quarter. Last year, a federal stimulus boosted sales of energy-efficient appliances.

RBC Capital Markets analyst Scot Ciccarelli sees a 5 percent drop in same-store sales, while Wedbush analyst Michael Pachter sees a 4.2 percent decline.

Analysts expect total sales to fall less than 1 percent to $10.71 billion. They see earnings of 33 cents a share, before items, versus 36 cents in the year-ago period, according to Thomson Reuters I/B/E/S.

Best Buy's results will show if it is losing bargain-hungry shoppers to online retailer Inc <AMZN.O> or other brick-and-mortar chains such as Target Corp <TGT.N>, Wal-Mart Stores Inc <WMT.N> and Costco <COST.O> that compete on price.

"Yes, consumer electronics retail faces competitive pressure from discount and online, but we think these forces have been exacerbated by a multi-category lull in product cycles," Stifel Nicolaus analyst David Schick wrote.

Some analysts expect that to change when a slew of tablet computers hit store shelves this back-to-school season and shoppers warm up to the idea of replacing their outdated TVs later this year.

"Our thesis is 2011 could see a developing HDTV mini-cycle as consumers entertain replacing 2003/2004-era Plasma sets," Schick said. "We think the consumer electronics industry was off target in attempting 3DTV and IPTV in 2010."

While demand for televisions is still uncertain, strong demand for smartphones and calling plans should help Best Buy's margins in the first quarter, analysts said.

Best Buy shares have fallen 6.4 percent in the past month, while the larger S&P 500 Index fell just 0.07 percent, in a sign that much of the weakness has also been baked into the retailer's shares.

Wall Street analysts on average expect same-store sales to drop 4 percent and operating margins to fall 40 basis points, Deutsche Bank analyst Mike Baker pointed out.

"Leading indicators, like industry sales and competitor comments, point to a soft quarter, but no worse than these expectations," Baker added.

(Reporting by Dhanya Skariachan, editing by Bernard Orr)