Ultra HD to Buoy TV ASPs for Holiday Quarter, Analyst Says

Janney Capital Markets raised its Q3 same-store sales estimates for Best Buy Monday from a negative 2.5 percent to negative 1.5 percent on strength driven by TVs. The retailer reports Q3 results on Thursday. For Best Buy's Q4, Janney is also upgrading its forecast to a 0.8 percent same-store sales increase from its previous forecast of a 0.2 percent decline, basing that upgrade on recent intelligence. High-end TVs will drive higher average selling prices (ASPs) during Q4, offsetting weakness in tablets, said analyst David Strasser. At about twice the price of HDTVs, 4K models are “starting to get into an affordable range,” and that will spur adoption as consumers replace 10-year-old living room TVs, said Strasser. Demand for large-screen and 4K Ultra HDTVs is “very strong,” and 4K will drive sales of large screens at prices that allow for “decent to substantial ASP gains year over year,” Strasser said. Best Buy’s relationships with LG, Samsung and Sony -- and sales strategies including price match, returns and free delivery -- “makes them a destination,” he said of Best Buy. In other CE categories, gaming, is a “wild card,” said Strasser. Other categories riding a positive trend are PCs, GoPro cameras, CDs and DVDs, and smartphones, the analyst wrote. Overall, the holiday season has started out promotional “but nothing dramatic” while similar to last year, Strasser said. “It appears the big brands have power over pricing, as key specials are all generally the same price at national retailers.” Among national retailers, Costco could turn out to be the winner by staying closed on Thanksgiving, he said. Extended hours on Thanksgiving for stores that will be open -- including Best Buy, Target and Walmart -- are not expected to drive additional sales, he said, and will instead “add labor hours and negative press about how retailers [are] ruining this family holiday.”