Tomahawk, WI 8/21/2013 (BasicsMedia) – As a multinational retailer, Best Buy Co Inc (NYSE:BBY) occupies a very unique place. It deals with consumer electronics, in addition to mobile phone and computing products. It also retails entertainment appliances and products. The company operates its businesses through its two segments, namely, domestic and international. It has closed and opened a number of its stores in both segments for various reasons. In this article, we seek to find out why the company has been closing and opening its stores and whether this should influence or affect investors in any way.


BBY Announces Profits for the First Time in a Year

It is worth noting that BBY is the largest consumer electronics chain in the whole world. But it has been facing a number of challenges, some of which threaten its very existence. The diagram above shows that the actual and estimated revenue for 2013 have thus far failed to meet or surpass those posted in 2012. When BBY recently posted its latest quarterly results, it didn’t escape most people’s attention that it had made profits. This is unique since it is the first of its kind in close to one year now. This could be a one-off or an indication that BBY is doing well.

What is noteworthy about the latest BBY financial results is the fact that the profits were achieved amidst a period when the company chose to tighten its costs. It would appear that its CEO, Hubert Joly, who has been on the helm for the last one year, has found a way of reducing the huge costs which the company had become notorious for in the past. If this new trend can be maintained, then the company could very well be out of the troublesome times it has been facing in the last few years. This would be wonderful news to investors if it can be maintained.

BBY’s Impressive Cost Cutting Measures

This takes us back to where we started. The decision by BBY to close some stores was based on the fact that there is a clear need for the company to cut its costs. Closing stores was not done in isolation, but was accompanied by the decision to remove a few layers of management, in addition to cutting some jobs both in its domestic as well as international segments. Moreover, BBY is not about to end these acts here. It will proceed with its plans to get out of the joint venture it has with Europe’s Carphone Warehouse, which it considers to be a non-core asset.

BBY has to do all of the above, and much more, if it intends to beat off very fierce competition from companies such as Inc and Wal-Mart Stores Inc. The company understands that it needs a motivated workforce and has opted to also reduce costs on goods rather than getting rid of its human resource only. It now stocks more of the fast moving products in its stores, and these include tablets and smartphones. Other areas where the company is investing in include revamping it stores, training employees and improving its website.

I believe that this is a stock worth having in your portfolio. It may be too early to trade in this stock.

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