Best Buy restructuring for focused growth
Best Buy Co., Inc. (NYSE:BBY) is a retailer of electronic products with a dual (online and brick-and-mortar) presence. The company has shown no growth in its revenues in the last two years. The gross margin figures for the company have been decreasing and it has reported net losses in 2012 period The high long-term debt of the company has made its financial leverage to shoot to 4.91 from a figure of 2.70 two years ago. Best Buy Co., Inc. (NYSE:BBY) needs a solid strategy to change its deteriorating performance.The company has started to price its products more aggressively and its new partnership with Microsoft has potential for increasing the company’s revenues.
The company has been facing tough competition from online-only retailers and because of that it is working on a turnaround plan. Through the plan, the company plans to cut costs by closing stores and investing in employee training. The joint venture with Microsoft will create a store-within-a-store offering. This would attract Microsoft’s loyal customers to Best Buy Co., Inc. (NYSE:BBY), increasing its sales further. The company is adjusting well to the changing technological landscape of the retailing industry and for that reason; I expect the company’s stocks to perform well in the coming months.
The electronic retail business will definitely benefit from the economic recovery in the United States. Moreover, the dynamics of each retailer have the ability to shape the future movements of the company’s stock price. I expect CONN’S, Inc. (NASDAQ:CONN) and Best Buy Co., Inc. (NYSE:BBY) to produce some solid returns for their investors whereas GameStop Corp. (NYSE:GME) is overbought in the market at present
The article Electronic Stores for Your Portfolio originally appeared on Fool.com and is written by Hussain Asghar.
Hussain Asghar has no position in any stocks mentioned. The Motley Fool owns shares of GameStop. Hussain 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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