Best Buy (NYSE:BBY) is the largest U.S. consumer electronics retailer by revenue, with $40 billion in net sales in fiscal 2008.^[1] However, the global economic slowdown has affected consumer behavior creating a difficult climate for the sale of electronic devices, which tend to be discretionary purchases susceptible to downturns. Best Buy's primary competitor in the electronics retailing market, Circuit City, has been struggling since 2006, posting a $321 million net loss for FY08^[2] and filing for bankruptcy in November 2008.^[3] Although Best Buy stands to benefit by taking Circuit City’s market share, the economic malaise has been resulting in lower-than-expected revenue for the consumer electronics giant. The strengthening of the dollar has also hurt revenue and profits tied to the company's international segment - operating margins for the international segment were 2.4% in 2008 compared to 5.4% company-wide.^{[4] [5]} However, Best Buy has had significantly higher operating margins from its Installation and Repair Services segment, 10-20%,^[6] because it is not as sensitive to recessions since most people at least occasionally have trouble with electronics and its services are regarded more as a necessity than a commodity, allowing the company to raise prices.

(Read more at Wikinvest )