Best Buy Co Inc (NYSE:BBY) looked like a goner about five years ago. Amazon.com Inc. (NASDAQ:AMZN) was starting to hit its stride and expand its product range, directly eating into the big-box tech retailer’s business and hampering BBY stock.
Best Buy was becoming more of an unwitting showroom for the e-commerce giant: Try it at Best Buy, then purchase it on Amazon.com.
There were pricing issues, service issues and BBY stores weren’t really keeping up with the fast-changing times. It’s hard enough to compete in the low-margin electronics business on a good day, but when you’re competing against other electronics stores like hhgregg, Inc. (OTCMKTS:HGGGQ) and big box discounters like Wal-Mart Stores Inc (NYSE:WMT), Target Corporation (NYSE:TGT) and Costco Wholesale Corporation (NASDAQ:COST) as well, you’ve got a very tough row to hoe.
By 2012, BBY realized it had to do something fast, and it had to be big. This wasn’t the time to fiddle around the edges, it was time to rebuild or die.
With new CEO and Chairman Hubert Joly at the helm, BBY launched its Renew Blue campaign in its 1,600 North American stores.
The five-point plan is still in place and has not only saved BBY from the fate of HHGGQ, but has put it on a growth path.
The initial plan was:
- Reinvigorate the customer experience.
- Attract and grow ‘transformational leaders’ and energize employees to deliver extraordinary results.
- Work with vendors to innovate and drive value.
- Increase the company’s return on invested capital by growing revenue and efficiency.
- Making the world a better place through recycling effort and providing teenagers with access to technology.
For 2017, Renew Blue’s goals are:
- Build on Best Buy’s industry position and multichannel capabilities to drive the existing business.
- Drive cost reductions and efficiencies.
- Advance key initiatives to drive future growth and differentiation.
Looking at its recent numbers, the plan is working. Online sales have grown by double digits in the past two years; employee engagement and retention are increasing every year.
What’s more, with the demise of competition like HHGGQ and other department stores, there’s less competition for BBY’s best potential customers.
BBY is trading near its 52-week high, up 57% in that time, and it still delivers a 2.6% dividend. It’s a shareholder-friendly company that has some very good days ahead.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, 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.
