Best Buy Estimated To Pick Up 20% In Market Share As hhgregg Closes Up Shop

When hhgregg, Inc. HGGGQ filed for bankruptcy in early March, it indicated a plan to close 88 of its 220 stores. On Friday, the company announced it would be closing the remaining 132 stores.

Best Buy Co Inc BBY is likely to be the “biggest beneficiary of this news” and gain market share, Deutsche Bank’s Mike Baker said in a report. He maintains a Hold rating on Best Buy, with a price a target of $46.

Advantage Best Buy

Best Buy could experience some pressure on sales in the near term, as hhgregg’s store organize liquidation sales. Following this, Best Buy stands to benefit, Baker stated.

hhgregg had recorded sales of $1.76 billion for 2016, with appliances accounting for 60 percent of the total sales, at $1.06 billion, and consumer electronics accounting for 35 percent.

Even if Best Buy can capture 20 percent of that, it would add about $335 million, or 0.9 percent to comps, “which for a company that historically comps in the down 1 percent to up 1 percent range, could be meaningful,” Baker pointed out.

The analyst mentioned that Best Buy was able to pick up 20–30 percent of “the up for grab sales” when Circuit City Stores Inc liquidated in 2009.

Related Links:

Why Street Sentiment On Best Buy May Depend On Apple