Summary

Brief Company Overview

Best Buy Co., Inc. is an American multinational consumer electronics retailer established in 1966 in Minnesota originally as an audio specialty store called Sound of Music. The company rebranded under its current name in 1983 with a focus on consumer electronics. The company operates both in domestic and international markets. There are six revenue categories - computing and mobile phones, consumer electronics, appliances, entertainment, services, and other.

At the end of the fiscal year 2023, ended January 28, Best Buy employed more than 90,000 employees in the U.S. and Canada. Of the total employees, 58% are full-time employees, 32% are part-time and 10% are seasonal/occasional employees. The company has two reportable segments - domestic and international. The Domestic segment is comprised of the operations in all states, districts and territories of the U.S. and Best Buy Health business, and includes the brand names Best Buy, Best Buy Ads, Best Buy Business, Best Buy Health, CST, Current Health, Geek Squad, Lively, Magnolia, Pacific Kitchen and Home, TechLiquidators and Yardbird and the domain names bestbuy.com, currenthealth.com, lively.com, techliquidators.com and yardbird.com. And the International segment is comprised of all operations in Canada under the brand names Best Buy, Best Buy Mobile and Geek Squad and the domain name bestbuy.ca.

The company had 1,138 stores at the end of fiscal 2023 throughout their Domestic and International segments.

Corie Sue Barry is the current CEO & Director of the company. As of May 2023, the company had 52-weeks price range of $93.32 to $60.79. Trailing P/E ratio of the company is 11.70 times, price to sales ratio (ttm) is 0.36 times, profit margin is 2.93%, operating margin (ttm) is 3.95%, return on assets (ttm) is 7.44%, return on equity (ttm) is 47.55%, diluted EPS (ttm) is $6.29. Payout ratio of the company is 55.96%. The company split its shares on August 03, 2005 to the ratio of 3:2. At the end of first quarter of fiscal 2024, ended April 29, 2023, the company had weighted-average diluted common shares outstanding of 219.9 million.

Recent Developments

• In fiscal 2022, we acquired all of the outstanding shares of Current Health Ltd. (“Current Health”) and Two Peaks, LLC d/b/a Yardbird Furniture (“Yardbird”).
• During November, 2020, Best Buy announced its exit from Mexico - a place where it has comparatively the smallest operation with 49 stores.¹ The decision came amid escalation of Covid-19 cases. The closure was completed by the end of first quarter of fiscal 2022 (end of February 2021).

Recent Financing Activities

• For the Q1 of fiscal 2024 ended April 29, 2023, Best Buy's board authorized a quarterly dividend of $0.92 per common share. The company had 218,499,262 shares of common stock issued and outstanding as of April 29, 2023.²
• In Q1 FY24, Best Buy repurchases shares of $79 million.³

Business Overview

The business of Best Buy is divided into two segments - domestic and international. Both segments operate an omnichannel platform that allows customers to come to online, to visit stores or to invite the company personnel to their homes. The activities of the company like development of merchandise and service offerings, pricing and promotions, procurement and supply chain, online and mobile application operations, marketing and advertising and labor deployment across all channels are centrally managed. Support and logistics activities like human resources, finance, information technology, and real estate management are managed from the corporate headquarters. The retail stores of the company have procedures for inventory management, asset protection, transaction processing, customer relations, store administration, product sales and services, staff training and merchandise display that are largely standardized. All stores generally operate under standard procedures with a degree of flexibility for store management to address certain local market characteristics. Day-to-day operations of the stores are led by the store management however more strategic decisions regarding, for example, store locations, format, category assortment and fulfillment strategy are addressed at a market or regional level.

Company History

Richard Schulze and his business partners opens up Sound of Music store in St. Paul, Minnesota, USA in 1966. The company acquires Kencraft Hi-Fi Company and Bergo Company in 1967. Sound of Music becomes a publicly traded company a year after and it opens three stores in the Twin Cities area. By 1970, the company hits the $1 million mark in annual revenue. After a decade of expansion, in 1983, the board of directors of the company approves a new corporate name, Best Buy Co., Inc. in 1983. The company with changed name issues IPO on the Nasdaq in 1985 to raise $8 million. Another public stock offering in the following year raises $33.6 million, which helped a 12-store expansion for the company.

In 1989, Best Buy unveils a revolutionary “grab-and-go” store format in a non-commissioned, warehouse-style environment; Best Buy’s brand logo changes to the familiar yellow tag. In 1993, Best Buy becomes the nation's second-largest consumer electronics retailer. In 1995, Best Buy ranked 373 among Fortune's 500 largest American companies. In 1999, Best Buy partnered with Microsoft to cross-promote products. Best Buy enters the online retailing business by launching www.bestbuy.com in 2000. The company enters the international market buy acquiring Future Shop in Canada in 2001. In 2003, Best Buy opens its first global sourcing office in Shanghai, China. Best Buy was named "Company of the Year" by Forbes Magazine in 2004. In 2006, Best Buy acquires majority interest in Jiangsu Five Star Appliance stores in China. The company opens its first retail store in Shanghai, China in 2007.⁴ However, the operation in China was merged with Jiangsu Five Star in 2011 and Best Buy ceased operating in China by closing all of its stores that year.

In April 2013, Best Buy exited the European consumer electronics market when it sold its 50% stake in The Carphone Warehouse back to the UK-based mobile phone retailer. On March 28, 2015, Best Buy announced the shutdown of the Future Shop chain in Canada; 65 of its 131 former locations were converted into Best Buy locations, while the rest (primarily those in close proximity to an existing Best Buy) were closed permanently. On March 1, 2018, the company announced that it would shut down its 250 standalone Best Buy Mobile stores in the United States by the end of May, due to low revenue and high costs. The Best Buy Mobile stores were reported to account for 1% of the company's revenue.

On May 9, 2018, the company unveiled a new logo. On July 2, 2018, Best Buy announced it was cutting the amount of store space devoted to selling physical music, citing the popularity of streaming services as having reduced sales. Despite an increase in sales of computer equipment due to an increase in remote work during the COVID-19 pandemic, Best Buy laid off over 5,000 employees in early 2021 and forced many others into part-time positions.⁵

1. ^ https://www.reuters.com/article/us-best-buy-results-mexico-idUSKBN2842RB
2. ^ https://investors.bestbuy.com/investor-relations/news-and-events/financial-releases/news-details/2023/Best-Buy-Announces-Regular-Quarterly-Cash-Dividend-2b727fa3e/default.aspx
3. ^ https://investors.bestbuy.com/investor-relations/news-and-events/financial-releases/news-details/2023/Best-Buy-Reports-First-Quarter-Results/default.aspx
4. ^ https://corporate.bestbuy.com/wp-content/uploads/downloads/BBY_TimeLine.pdf
5. ^ https://www.cnn.com/2021/02/25/business/best-buy-store-closures-workers/index.html