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Best Buy

  • Best Buy logo52- Week Low: $11.20
  • Year-to-Date Gain: 126%
  • 1-Year Gain: 39%

Why Left for Dead: For electronic retailer Best Buy (BBY), 2012 was a year in which the company had to weather a bid to take the company private from its own run-out-of-town founder Richard Schultze, who waved a $24 to $26 per share price around late last summer, only to see his efforts die just recently.

At the same time, competition from Amazon (AMZN),  Target (TGT) and Walmart (WMT) cost BBY revenue … and with stores closing, employees losing jobs, and the company using up its meager supply of cash to repurchase stock, all was looking pretty lost by year end.

What’s Changed? Hiring Herbert Joly in September — a move that nobody saw coming — just might’ve worked. Joly stabilized a confused and rudderless management, and while he had to make the tough decisions on layoffs and store closings, at least someone was in charge.

Joly also took a step in the right direction by naming Williams-Sonoma’s (WSM) Sharon McCollum as its CFO. McCollum spent 10 years with the retailer, including 6 as COO, and her expertise in e-commerce put BBY on a better track for its online business.

Long Term Prospects: Schulze gave up trying to buy the company, accepting a role as “Chairman Emeritus”. The stock reacted with an immediate 5% bump on the February news. So at least that roadblock is out of the way.

Joly and his management team are focused on growing the online footprint. How? One example is BBY’s introduction of  a low-price guarantee that allows customers both online and in the store to price-check items against 19 competitors to find the lowest price … and match it.

But wait, there’s more: BBY closed 49 Best Buy Big Box stores, while opening up 126 new Best Buy Mobile locations. You get the drift: big box bricks and mortar are slowly on the way out. The strategy is slowing paying dividends: While Q1 FY 14 revenues were lower against Q1 FY 13 by almost 10%, the company saw a decrease in same store-sales declines, down to 1.5% from 5.25%, and comparable online sales increased 16% — a bump up from 10% during the comparable period.

Verdict: This one might take some time, but with a dividend to sit on and Joly firmly in charge, I believe BBY is a longer-term keeper.

Article printed from InvestorPlace Media,

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