Best Buy (NYSE:BBY) is one of the remaining big-box consumer electronics stores. And while BBY stock was swirling the drain a few years ago, it is now in recovery mode.
One of the big boosts to its turnaround is, ironically, the demise of some its big competition like HHGregg and Sears. Circuit City was another big competitor that couldn’t make it.
That would lead some to think that if other consumer electronics stores can’t make it, maybe this also doesn’t paint an encouraging long-term picture for Best Buy.
BBY Stock Has Tailwinds
But BBY stock has been undergoing significant changes under new leadership, and the changes are working. That has been evident in almost every quarter since Best Buy was rebooted by Hubert Joly when he took over the CEO role in 2012.
The company was headed the way of some of its former competitors when Joly stepped in — and he shook things up right away.
First, he wasn’t from the world of retail stores, he was from the hospitality industry. Second, he eschewed a simple mission statement and instead developed a statement of core values:
- Unleash the Power of Our People
- Learn from Challenge and Change
- Show Respect, Humility, and Integrity
- Have Fun While Being the Best
But he didn’t end with these platitudes. He also tied them to what it calls its Unique Customer Promise:
- The Latest Devices and Services, All in One Place
- Impartial and Knowledgeable Advice
- Competitive Prices
- The Ability to Shop When and Where You Want
- Support for the Life of Your Products
While these seem like simple concepts that are easily said or posted on a bulletin board in a break room, leadership’s commitment to these sets of values has been consistent and pervasive. And it’s reflected in not only the way Best Buy employees do their jobs, but also how management has restructured to make these things happen at the ground level.
Joly also instituted a price-match policy so that if a customer comes in to play with a device and knows he or she can get it cheaper online, BBY will now match that price, keeping buyers in the store rather than shopping online for the same product.
He also discovered — there is a powerful culture of management visiting stores and listening to its workforce and customers — that its Geek Squad of mobile tech experts is a very popular piece of BBY stock’s value chain.
And by listening, he found out there was opportunity in expanding those services to in-home consultations to help people figure out what they need before they buy a TV, sound system or computer.
BBY stock is looking to expand its services business, and that’s partially the reason why its margins were a bit weaker in Q3, since it’s a lower-margin business. However, the rest of the numbers were strong and BBY was one of the few retailers that actually guided higher for Q4.
Given the current volatility, it may not be at its low, but it’s a lot further along its downside than it is to its upside potential. And the dividend helps keep you in the game until that changes.
Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth Investor, Breakthrough Stocks, Accelerated Profits and Platinum Growth. His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
