Best Buy (BBY) is definitely feeling the pain thanks to e-commerce competition and pinched margins. But the embattled big-box store has adapted and learned how to survive — and even thrive — in this environment.
Though sales have mostly flat-lined since 2010, Best Buy has managed to stage a pretty substantial turnaround by slashing costs to offset shrinking profit margins. In fact, Best Buy might close out this fiscal year with its first annual profit since 2011, and is forecast to then grow earnings a modest 8% again next year.
And amid better profit margins and operations in brick-and-mortar stores, don’t forget that Best Buy is taking the fight to Amazon (AMZN) on the Internet, too. The company saw double-digit year-over-year growth for online sales in the second quarter as part of a continued push to get people buying both in stores and on the web.
Sure, part of the pop in share price to start the year was thanks to founder Richard Schulze making noise about taking BBY private, and a resulting short squeeze. However, it seems less like manipulation or hype after the recent financials have come out, and instead more like true confidence in the business.
Perhaps investors should have confidence in Best Buy, too.
With a 1.8% dividend, there’s also a bit of a sweetener should the gains fail to keep up.