Best_Buy_Fall_2017.pdf - Best Buy Co Inc Me Graw Hill...

Info icon This preview shows pages 1–3. Sign up to view the full content.

Best Buy Co., Inc. Me Graw Hill Education MHE-FTR-039 1259420477^ REV; SEPTEMBER 30, 2015 MARNE L. ARTHAUD-DAY FRANK T. ROTHAERMEL Best Buy Co., Inc. Shortly after assuming office. Best Buy's chief executive officer (CEO) Hubert Joly shared a bmad outlme of Ws turnaround plan-dubbed "Renew Blue"-with investors. His goal was to address what he saw as Best Buy s two mam problems: declining comps and margins. Three years into his recovery efforts, Joly was proud of what he had accomplished thus far. After four years of negative dome^ tic coinparable sales, fiscal year 2015 posted a 0.5 percent sales increase. The company's domestic non-GAAP (generally accepted account principles) operating income had also reversed its four-year downward trend and mcreased from 3.1 to 4.1 percent. Non-GAAP earnings per share for continuing operations were up 26 percent over 2014, and the company had posted a $1.3 billion increase in cash cash equivalents, and short-term investments at year end.^ This represented a dramatic improvement over the company Joly had inherited in September 2012 Despite being the world's largest retailer of consumer electronics with $50 billion in annual sales. Best Buy s fmancial situation at that time was precarious. The company's stock price had fallen from $45 to $15 per share over a two-year period, a drop of roughly 60 percent.^ Earlier that same year. Best Buy had been forced to report a 91 percent drop in profits during the second quarter compared to the same period in 2011 ; the third quarter showed a 97 percent drop in operating income.^ As Joly had previ - ously told investors, one of his first priorities had been to stabilize the company before he could imple - ment ways to improve its performance.® ^ Now that the company was on solid ground, he looked forward to building on its strengths "to define ^d take the actions that will allow us to win in the marketplace, and to be seen by all of our s akeholders as the best buy." As Joly saw it. Best Buy sold far more consumer electronics than either of Its largest competitors ($50 billion compared to ~$30 billion for Walmart and $14 billion for Amazon) and dominated the PC, camera, and tablet categories in terms of market share. It also had state-of-the- art logistics, inventory, and support systems that enabled it to make same-day deliveries for online orders. Meanwhile, Best Buy's online business was the eleventh largest e-commerce site worldwide and was growing by 15 to 20 percent each quarter.^ Despite the fact that competition in the consumer-electronics industry remained cut-throat, Joly was convinced that the company's mix of "Expert Service. Unbeatable Prices." provided a clear value prop - osition. Recently, even the critics had started to agree with him. Instead of predicting that Best Buy was doomed to follow other national consumer electronics retail superstores into extinction, analysts
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Rothaermel, Strategic Management:Concepts and Cases Best Buy Co., Inc.
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern