Speculation about the future of Best Buy, the giant consumer electronics retailer, has intensified in recent weeks as it reports disappointing results from the just-concluded holiday shopping season.
Best Buy, based in Richfield, reported Friday that sales slipped again in December. The company faces intense competition from rivals such as Target, Walmart and Amazon.com -- and has been losing customers, sales and profits to them.
For many consumers, Best Buy has turned into a showroom where they can check out a product before buying it online from someone else.
Best Buy reported Friday that its December sales were down about 1 percent compared to the same month a year ago. That was for online sales and sales at stores open at least 14 months. That "same-store" sales measure is a key indicator of a retailer's financial health. That was better than a year ago, when Best Buy's same-store sales fell by 4 percent. Best Buy has about $50 billion in annual sales.
Best Buy may be gaining back market share from competitors in recent months. That's prompting some analysts, like Matt Arnold with Edward Jones, to think Best Buy may be starting to turn around its performance.
"You can't grow until you stabilize," he said. "And there's some signs of stabilization in the business."
But lately analysts have also been contemplating a potentially very destabilizing event: the prospect of Best Buy being bought out by a private equity firm.
"It does make a lot of sense that Best Buy would be an attractive takeover target for a private equity suitor," said R.J. Hottovy, a retail analyst with Morningstar.
"I don't think there's any indication that Best Buy is in any talks to do so," he said. "I think it's more of situation where it screens well from a leveraged buyout perspective. Somebody with a private equity background might be a better fit to come in and right the ship."
But Hottovy thinks a buyout is a long shot, and Matt Arnold of Edward Jones agrees.
"These rumors happen all the time when a company sees some difficulty or a stock trades off," he said. "But the actual frequency of buyouts is low. It's something that is thought about at length but happens pretty infrequently."
In fact, some analysts wonder how much of a future there is for a big-box retailer selling electronics, in an age when it those products may be best sold online by retailers without stores.
"There's a very big question about the business model," said Barry Henderson, an analyst with T. Rowe Price. "I'm not sure that in 10 or 15 years, there really is a reason for Best Buy big box stores to exist."
Best Buy's current management is hardly giving up. But they're figuring out how the company is going to shrink and reconfigure its stores to drive up sales and profits, while battling retailing giants intent on wooing away customers with low prices.
Even after a nice bump up in its stock price Friday, Best Buy shares have lost about a third of their value over the past year.