Best Buy (NYSE:BBY) is about to release earnings. Ponder this Bear Case Scenario:
Entertainment software category is shrinking. Replacement products have smaller margins and so it gets harder to make a buck.
Competing channels abound. Everyone is after the same consumer who will only buy once not weekly like groceries. What is the difference? Price competition is prevalent and difficult.
Warranty sales historically have been huge and ultra-profitable. Warranty sales come with big-ticket purchases such as appliances. As these sales drift away the profitable cash generating warranty will diminish.
George Gutowski writes from a caveat emptor perspective.