Best Buy Valuation
Best Buy’s Valuation
Best Buy Co.,Inc. (BBY) is one of the leading retail stores in the United States. It was founded in 1966, and its headquarter is located in Richfield, Minnesota. It operates in both domestic and international segments (Canada & Mexico). Best Buy is a multinational specialty retailer that includes six main revenue categories: 32% consumer electronic, 46% computing and mobile phones, 8% entertainment, 8% appliances, 5% services, and 1% others. Best Buy has maintained a steady growth rate over the past years despite the unpredictable market. As of today, Best Buy generates over 39 billion in revenue in the 2016 fiscal year. They are always looking for opportunities to improve and grow by building their business model and …show more content…
Revenue and cost are main factors. Like many retailer companies, Best Buy was struggling to increase sales due to the decrease of in-store traffic. In 2012, Best Buy welcomed their new CEO, Hubert Joly, a turnaround expert, who introduced the “Renew Blue” program to help stabilize and strengthen the company’s health. The company also makes extensive investments in revenue growth and cost reduction. To bridge the gap, Joly made many changes in many parts of the business. A major change was online sales. Best Buy invested in and focused on improving its website to attract shoppers, rather than allowing those customers to drift to Amazon. As a result, the online sales growth accounts for 23.7% of revenue in third quarters of 2016. Based on the past performance and changed, we forecast sales to increase 1.25% per year. Historical Analysis trend for COGS remains constant at 77%, which is normal for BBY. We project that COGS will remain at that rate over next 5 years. On the other hand, we forecasted SG&A at 20% for two years and 19% for the remaining three years because of Best Buy’s Renew Blue program. Since its inception, the “Renew Blue” showed many positive impacts, including the increase in revenue and decrease in cost. While many thought that Best Buy would follow in the footstep of Circuit City, Best Buy has defied expectations. Best Buy quickly recognized, adapted, and changed their business model to fit with
Best Buy Co.,Inc. (BBY) is one of the leading retail stores in the United States. It was founded in 1966, and its headquarter is located in Richfield, Minnesota. It operates in both domestic and international segments (Canada & Mexico). Best Buy is a multinational specialty retailer that includes six main revenue categories: 32% consumer electronic, 46% computing and mobile phones, 8% entertainment, 8% appliances, 5% services, and 1% others. Best Buy has maintained a steady growth rate over the past years despite the unpredictable market. As of today, Best Buy generates over 39 billion in revenue in the 2016 fiscal year. They are always looking for opportunities to improve and grow by building their business model and …show more content…
Revenue and cost are main factors. Like many retailer companies, Best Buy was struggling to increase sales due to the decrease of in-store traffic. In 2012, Best Buy welcomed their new CEO, Hubert Joly, a turnaround expert, who introduced the “Renew Blue” program to help stabilize and strengthen the company’s health. The company also makes extensive investments in revenue growth and cost reduction. To bridge the gap, Joly made many changes in many parts of the business. A major change was online sales. Best Buy invested in and focused on improving its website to attract shoppers, rather than allowing those customers to drift to Amazon. As a result, the online sales growth accounts for 23.7% of revenue in third quarters of 2016. Based on the past performance and changed, we forecast sales to increase 1.25% per year. Historical Analysis trend for COGS remains constant at 77%, which is normal for BBY. We project that COGS will remain at that rate over next 5 years. On the other hand, we forecasted SG&A at 20% for two years and 19% for the remaining three years because of Best Buy’s Renew Blue program. Since its inception, the “Renew Blue” showed many positive impacts, including the increase in revenue and decrease in cost. While many thought that Best Buy would follow in the footstep of Circuit City, Best Buy has defied expectations. Best Buy quickly recognized, adapted, and changed their business model to fit with