Best Buy (NYSE:
) shares closed up 5 percent at $12.21 on Thursday following news
that the company was reclaiming market share from online retailers
now forced to charge sales tax in some states.
Then, on Friday morning, Best Buy reported that sales at stores
open at least one year fell 1.4% in the nine weeks ended January 5.
Sales at U.S. stores during the recent holiday season were flat.
Even with these less than impressive figures, BBY rallied another 7
percent in pre-market trading.
Best Buy hopes for a turnaround as Amazon (NASDAQ:
), which ended the trading day yesterday down 0.38 percent at
$265.34, is forced to collect sales taxes in more states.
Best Buy spokeswoman Amy von Walter
that in California, Texas and Pennsylvania -- where Amazon recently
started collecting sales tax -- Best Buy has seen a 4 to 6 percent
increase in online sales versus the rest of the chain.
The sales tax playing field for brick and mortar retailers is
not level yet, but the trend is growing. Many states, hungry for
extra tax revenue, have introduced new laws requiring that
Internet-only retailers also collect sales tax.
Presently, Amazon collects sales taxes in only seven states.
There will be seven more by 2016. According to the National
Conference of State Legislatures, the states that currently collect
sales tax from Amazon are Kansas, Kentucky, New York, North Dakota,
Texas, Washington, and Pennsylvania.
States that will collect in the future: New Jersey, Virginia,
Indiana, Nevada, Tennessee, South Carolina, and California.
Big retailers like Best Buy hope that the requirement to collect
sales tax will reduce Amazon's price advantage and help them recoup
some sales that have been lost to the Internet retailer.
It is widely believed that many shoppers visit retailers like
Best Buy to inspect merchandise and ask questions (a process known
as showrooming), then return home to order from Amazon. Best Buy
and others hope to gain sales as the price differential
Other retailers that might see sales increase as more states
force Amazon to collect sales tax include Wal-Mart (NYSE:
), Sears (NASDAQ:
), and Target (NYSE:
). Target recently announced year-round price matching with online
An Amazon spokesman declined to comment when asked if the
company saw an impact on fourth-quarter sales with the imposition
of sales tax in California, Texas and Pennsylvania. In the past,
Amazon executives have said there was little or no sales impact
from such changes in other regions.
(c) 2013 Benzinga.com. Benzinga does not provide investment advice.
All rights reserved.
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