David Tsao

Tough Year Ahead For Specialty Retailers

What is your take on Best Buy's (BBY) business in emerging markets? I've heard that most consumers just go in there to look at things and walk across the street to those massive PC malls to buy their gear (lower prices).

I don't know if specialty retailers like Best Buy will work in these markets. It's not a cookie cutter business model you can take over.

On the other hand, companies like WalMart who have pricing power, and Tiffany's with a strong brand presence will do well over time.

It will be some time before overseas operations for Home Depot and Best Buy provide soft landings when the US economy dives. Amazon which is not a specialty retailer has done well with almost 50% of revenues coming outside of the US (although valuations are high at the moment, margins extremely low).