Samsung to open brand shops in Best Buy stores; Wall Street approves

Thu Apr 4, 2013 12:13pm EDT
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By Dhanya Skariachan

NEW YORK (Reuters) - Samsung Electronics Co Ltd (005930.KS: Quote) is planning to install its brand shops in more than 1,400 Best Buy Co Inc (BBY.N: Quote) stores this year, a move that some on Wall Street said could help the world's largest consumer electronics chain boost in-store traffic, sales and profitability.

The news pushed Best Buy shares up 12.5 percent to $24.36 on Thursday.

The store-within-a-store effort is a key element of Best Buy's turnaround plan, which includes dedicating more space to more-profitable products like tablets and mobile phones. The company is also trying to use its clout with suppliers to fight online and discount rivals.

JPMorgan analyst Christopher Horvers said the Samsung deal was "another step in the right direction" and better positioned Best Buy against online retailer Inc (AMZN.O: Quote).

"Retailers and vendors are learning how to better cope with online and pricing challenges to become more profitable omnichannel retailers," Horvers said.

The expanded partnership with Samsung is akin to the Best Buy's tie-up with Apple Inc (AAPL.O: Quote) as well as Dick's Sporting Goods Inc's (DKS.N: Quote) partnerships with vendors Nike Inc (NKE.N: Quote), Under Armour Inc (UA.N: Quote) and North Face (VFC.N: Quote).

Best Buy's latest move "is a clear indication" that the retailer is better using its key partnerships to boost traffic and sales, Horvers said.

Janney Capital Markets analyst David Strasser said the move was "a wakeup call" for Best Buy's other key partners - Google Inc (GOOG.O: Quote), Sony Corp (6758.T: Quote) and Microsoft Corp (MSFT.O: Quote).   Continued...

The logo of Samsung Electronics is seen at the company's headquarters in Seoul July 6, 2012. REUTERS/Lee Jae-Won