Recently, Best Buy Company Inc. (BBY), the leading specialty retailer of consumer electronic products, announced the locations of few big box stores that it intends to close, Associated Press reported.
The company will pull down shutters on some big box stores, which are not contributing to its growth, while modifications of others are also on the cards. The company announced the closing of 50 U.S. Best Buy big box stores in fiscal 2013, including six in Illinois, seven in California and six in Minnesota.
Earlier, Best Buy announced a string of strategic measures to boost its long-term profitability. With its multi-channel strategy, the company intends to modify its store formats while increasing its global footprints.
Best Buy, through its cost reduction program, intends to generate $800 million in costs saving by fiscal 2015, including $250 million in fiscal 2013. The company plans to open 100 U.S. Best Buy Mobile small format stores in fiscal 2013 and increase the total number of such stores to 600-800 by fiscal 2016.
Going forward, Best Buy plans to accelerate the growth of its business in China while boosting its connections and services and digital capabilities. Best Buy expects to open 50 new Five Star stores in China in fiscal 2013, while it plans to generate $4 billion in sales and increase the store count to 400-500 by fiscal 2016.
The company expects to generate a 15% increase in its Domestic online sales in fiscal 2013. Moreover, it targets $4 billion online sales by fiscal 2016. Revenues in Domestic segment services category are expected to increase by 10% in fiscal 2013.
Connections in the U.S. are expected to rise by 15% in fiscal 2013, driven by growth in mobile phone, tablets and computing connections.
Best Buy expects fiscal 2013 revenues between $50 billion and $51 billion, while comparable store sales are expected to decline by 2.1%. Adjusted operating income is anticipated to decrease in the range of 4% to 11% compared with the prior-year results.
Currently, we have a long-term ‘Neutral’ rating on the stock. Moreover, Best Buy, which faces competition from Wal-Mart Stores Inc. (WMT), holds a Zacks #3 Rank that translates into a short-term ‘Hold’ rating.
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