Best Buy Co., Inc. (BBY): Why Renew Blue Matters For This Giant Retailer

Amazon.com, Inc. (NASDAQ:AMZN) remains a growth company, as its net sales grew22% to $16.07 billion in Q1 as compared with $13.18 billion in first quarter of 2012. However, its net income decreased 37% in the same period. Amazon continues to sacrifice profit for growth and maintain its leadership position. By boosting up its Prime Instant Video offerings, upgrading its Kindle tablets and enhancing its Amazon Web Services (AWS), Amazon remains a solid growth play with 20% plus expected annual revenue growth for 2013 and 2014.

Best Buy needs to accelerate its online growth and enhance the multi-channel customer experiences continuously. Best Buy is upgrading its onsite search capability while trying to create better customer experiences across mobile and PC devices. On the other hand, Best Buy starts to tackle the out-of-stock issues for its online operation by maximizing the store capability. By enabling the fulfillment of its online orders through all of Best Buy’s distribution centers, Best Buy Co., Inc. (NYSE:BBY) can further leverage its scale. The company is also seeking to improve its supply chain by working on its reverse logistic.

Moreover, Best Buy is replacing low margin categories in the stores with higher margin, higher growth ones, such as mobile, appliances and accessories. Lastly, the company is taking more initiatives to optimize its US real estate portfolio, renegotiate the rent reductions for some stores, as well as decrease SG&A costs.

Bottom line

With Renew Blue, Best Buy has significantly improved its operation, becoming a better multi-channel retailer. By becoming more competitive online and improving its bottom line, Best Buy Co., Inc. (NYSE:BBY) will become more profitable.

The article Why Renew Blue Matters For This Giant Retailer originally appeared on Fool.com and is written by Nick Chiu.

Nick Chiu has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com and Microsoft. Nick is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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