Is Best Buy’s ‘Renew Blue’ igniting a turnaround?
It may be too soon for Best Buy stakeholders to break out into a chorus of "Happy Days Are Here Again," but there’s no doubt that Wall Street was both surprised and impressed with the chain’s results during the third quarter.
Same-store sales at the chain grew 2.2 percent during the quarter (up 2.4 percent for U.S. stores), much better than the two percent decline predicted by analysts. The company pointed to strong sales of televisions, computers and tablets as well as increases in gaming and appliances for its positive performance.
CEO Hubert Joly, who joined Best Buy in 2012, has been credited with getting the company’s finances in order through a series of cost-cutting measures. At Best Buy’s annual shareholders meeting in June, Mr. Joly spoke about the next phase of the company’s turnaround, "Renew Blue, Ignite the Possible," which includes the expansion of its store-within-a-store concept highlighting major brands, including Microsoft and Sony. The initiative also includes the development of market level strategies so the company can react more effectively to local conditions.
Looking ahead to Best Buy’s fourth quarter, Mr. Joly expressed optimism for the company’s plans for the holidays. He pointed to customer-facing initiatives in key departments such as appliances, connected home and home theater; increased inventory in stores, as the company has expanded ship-from-store from 400 stores in 2013 to 1,400 at present; and a clearer value proposition defined by the company’s tagline — "Expert Service. Unbeatable Price."
Mr. Joly, however, was clear on the company’s third quarter earnings call with analysts that a variety of factors could affect Best Buy’s numbers. He pointed to a "very intense" promotional environment as a key element in this year’s competition for market share. "If anything, it’s probably a little bit more intense than last year," he said.
- Best Buy Reports Third Quarter Results – Best Buy Co., Inc.
- Best Buy’s (BBY) CEO Hubert Joly on Q3 2015 Results (Earnings Call Transcript) – Seeking Alpha
- Best Buy Tells Amazon: Take That! – CNNMoney
- Best Buy Is Finally Making a Comeback – The Motley Fool/Time
- Best Buy Turnaround Gains Steam After Surprise Sales Gain – Bloomberg News
- Best Buy’s CEO Presents at 2014 Regular Meeting of Shareholders Conference (Transcript) – Seeking Alpha
- Best Buy’s strategy: ‘Renew Blue, Ignite the Possible’ – RetailWire
What do you see as the key elements of Best Buy’s turnaround efforts under Hubert Joly? What do you expect from the chain during the holiday season and beyond?