Best Buy Co., Inc
) surged to attain a new 52-week high of $39.66 on Oct 14, 2013,
before closing at $39.61. Shares of this Zacks Rank #2 (Buy)
stock have amassed a year-to-date return of roughly 242%.
Based on the current price, this online and brick and mortar
electronic retailer is 2.1% above the Zacks Consensus average
analyst price target of $38.80. The company currently trades at a
forward P/E of 16.42x, in line with the peer group average.
Best Buy is undergoing a turnaround program including the
price match policy, multi-channel strategy, multi-year cost
reduction program and closing of some big box stores. Best Buy,
in second-quarter fiscal 2014, has successfully lowered its cost
by $65 million, thereby bringing the total reduction to $390
million out of $725 million targeted from the North American
Management is undertaking a competitive pricing strategy and
making investments in areas such as online, mobile, the
multi-channel approach, optimum utilization of floor area and
refurbishment of its website (bestbuy.com) functionality. Best
Buy also initiated the "buy online - ship from store"
Best Buy's online sales performance remains a positive.
Domestic online sales came in at $477 million, while comparable
online sales jumped 10.5%. We believe that the company is leaving
no stone unturned in wooing consumers and capturing incremental
revenue, as evident from its strategic initiative of opening
"Samsung Experience Shops" within its stores.
It also entered into a similar agreement with
) to roll out "Windows Store" across its 500 outlets in the U.S.
with an additional 100 in Canada. For Best Buy, the deal adds
more compelling products to its portfolio to better compete
against discount giants such as
Wal-Mart Stores Inc.
) and online retailers like
Best Buy also completed the divestiture of its 50% stake in
Best Buy Europe to Carphone Warehouse Group, the joint venture
partner in the same. The move would facilitate the company to
concentrate more on its U.S. operations. We believe that the step
to offload its stake in Best Buy Europe would augment its return
on capital employed.
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