Renew Blue to save Best Buy after disastrous quarter

As an American multinational company that mainly operates on consumer electronics, Best Buy Co. Inc has maintained well-reputed image in a very intense and competitive market. Best Buy was originally founded by Richard M. Schulze and Gary Smoliak in 1966. Back then this company was simply an audio specialty store. The company experienced major revamping in 1983 when it was renamed and rebranded to an electronics company.

Over the course of time Best Buy has become the parent company of a number of popular brands. Its current renowned subsidiaries include CinemaNow, Geek Squad, Magnolia Audio Video, Pacific Sale, Cowboom, Future Shop, Cell Shop, Connect Pro and Speakeasy. These were the names of subsidiaries in United States and Canada alone. Best Buy in China has subsidiaries such as Best Buy Mobile and Five Star. Their range in Mexico includes Best Buy Express and Geek Squad.

Best Buy has also dwelled into the cellular phones market. Currently, Best Buy sells phones from Verizon Wireless, AT&T Wireless, Sprint PCS, Boost Mobile and T-Mobile. Best Buy Co., Inc. Stock Prices are experiencing difficult times. After the massive drop in BBY Stock Price in mid-January Best Buy has been unable to stand back on its feet. For the past four months BBY Stock Prices have been hovering around 25 points. Turbulence along that region can be noticed on the BBY Stock Graph.

Best Buy’s President and CEO Hubert Joly has been unable to come up with a plan to turnaround the fate of the company so far, but a lot of planning seems to be going on behind the curtains. The fourth quarter results of Best Buy were less than satisfactory. Joly believes the holiday sales release was hugely affected by “an environment of declining retail traffic, intense promotion, fewer holiday shopping days and severe weather”.

A price competitive scheme and an improved customer experience was Joly’ main strategy to bring a positive trend on the BBY Stock Graph, but little has been achieved. Truth be told, it is a weaker-than-expected market of consumer electronics which is why Best Buy experienced a surprising decline of 120 basis points. Joly is expected to cut the losses through cost saving methods and operational improvements.

In such testing times, Joly turned to Renew Blue to provide stability to Best Buy. In the fourth quarterly report Joly explained that Renew Blue had indeed helped make substantial progress. In only a year’s time the original Renew Blue cost reduction of $725 million was instead met by $765 million. But, Joly and his crew had no time to open champagne bottles over their victory as they were buy stabilizing the top and bottom lines.

The best way to increase the value of the BBY Stocks is to increase sales and that can only happen through happy customers, so enhanced customer experience is the key to the future. Best Buy’s quarterly report shows that there has been a 20% increase in Domestic online sales. Moreover, Best Buy has made its prices more competitive to penetrate into the market. Customers looking for better prices will be the key to rebuilding Best Buy.

Promotion of the hottest brand in the market is another key to success in the future. Best Buy has opened a total of 1,400 Samsung and 600 Windows mini-stores within its space to make customers flock to the in swing brands in the market. The re-launching of loyalty and credit card programs is also expected to contribute towards success of Best Buy. The Renew Blue transformation appears to be taking Best Buy towards a brighter future, but more thought needs to be delivered on the capital allocation process on each of their projects.