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Direct Competitor ComparisonBBYAAPLWMTAMZNIndustryMarket Cap:12.98B631.75B211.18B254.28B4.38BEmployees:125,00092,6002,200,000154,10018.00KQtrly Rev Growth (yoy):0.010.3300.20.3Revenue (ttm):40.33B224.34B485.62B95.81B9.39BGross Margin (ttm):0.230.40.250.310.27EBITDA (ttm):2.19B77.88B35.27B5.73B820.00MOperating Margin (ttm):0.040.30.050.010.03Net Income (ttm):841.00M50.74B15.49B-188.00MN/AEPS (ttm):2.598.654.79-0.412.59P/E (ttm):14.5512.8113.75N/A14.59PEG (5 yr expected):1.330.823.219.380.85P/S (ttm):0.322.810.432.60.47*AAPL= Apple Inc.*WMT= Walmart Stores Inc.* AMZN= Amazon Inc.* Industry= Electronic stores8Historical Financial StatementsHistorical financial statements for the Best Buy can be found in Exhibit 6 of this document. Data has been copied from SEC filings from 2015 to generate these tables. Historical data was used to generate Pro-Forma projections using a linear regression of
Best Buy Business Case13the last three years and are included (green highlights) in this section. The structure of these pro-forma financials may be slightly skewed however, as a year of net loss in 2013 followed by two years of reasonable profits distort the regression and result in a curve with a steeper slope than is truly likely. 9Ratios and Financial Condition AnalysisBest Buy has a vast amount of resources and capabilities. Employees are experts in their field and there is a main store for selling products. Although Best Buy has a large online database of inventory and stock available there needs to be an improvement in turnover and inventory management. Best Buy has outlasted its long term competitor Circuit City however, new threats such as Amazon and Walmart have low overhead and consumers use Best Buy as a showroom (Wells & Danskin, 2012). Meaning they try out products at Best Buy, then purchase the items directly from the competitors for a lower cost. Close to 85% of all sales are focused in the United States with only 11.2% in Europewith China, Canada and Mexico with combine sales at 25%. Some analysts believe Best Buy should focus their strategy on international sales to raise profit shares. Other analysis in 2013 found that Best Buy should forget about global expansion and capitalize on the needs here in the United States. (Marketwatch, 2013).
Best Buy Business Case14Best Buy has been losing market shares to Amazon, Walmart and other industry stores over the past several years. The differentiation to develop Geek Squad was brillant.Its a corner in the market place that other companies havent tapped as aggressively before. Best Buy should focus on developing mobile software solutions and encourages users to download the app on their cell phones. Best Buy is the biggest retailer in the industry. It took over Circuit City and later Radio Shack with $51B in revenue. The key to Best Buy's future is to give the consumer a reason to purchase their items in the store vice buying from Amazon online. By focusing on their strengths of education, training and instore experience Best Buy may be able to convince consumers to buy inside the store instead of try out products and buy elsewhere. Best Buy's future depends on how well they capitalize on their strengths and follow the trends.