Are Shares of Best Buy Co., Inc. (BBY) Set for a Crash Landing? – J.C. Penney Company, Inc. (JCP), Hewlett-Packard Company (HPQ)

So, what’s the problem with this mentality? Best Buy’s behemoth brick-and-mortar operations, while steadily shrinking, still represent a significant overhead disadvantage when compared to online-only competitors like Amazon.com, and its near-fanatical focus on streamlining operations, all in the name of offering lower prices to consumers.

Without the burden of physical stores to maintain, Amazon is free to focus more energy on forward-looking initiatives like bolstering its world-class website, and building new strategic warehouse locations to improve delivery times. In addition, Amazon isn’t afraid of making acquisitions of complementary cutting-edge companies, including its $775 million purchase early last year of Kiva Systems for its orange swarm of warehouse-optimizing robots. Given Amazon’s edge, one can’t help but wonder how long Best Buy will be able to stand the pressure of promising to match online prices before it has to renege.

Unfortunately, Best Buy’s comparable store sales aren’t looking great, either. While domestic comparable sales managed to grow 0.9% (coinciding with a 10 basis point decline in gross profits), part of those increases were the result of the aforementioned shift in pre-Super Bowl television sales. In addition, while comps in Europe also grew, total international comparable sales fell 6.6%, largely thanks to double-digit comp declines in Canada and China.

The unknown
Even so, Best Buy’s stock remains on a tear, with hopes that the company can once again exceed expectations in the coming quarters. While the stock may have some upside left, playing short-term fluctuations isn’t exactly the most Foolish thing to do. Considering management’s comments for the coming quarter, then, I won’t be willing to buy shares of Best Buy until it can prove it has what it takes to not just survive, but also thrive over the long haul.

The article Are Shares of Best Buy Set for a Crash Landing? originally appeared on Fool.com and is written by Steve Symington.

Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com.

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