Best Buy Co., Inc. (NYSE: BBY) is a specialty retailer of consumer electronics in the United States, accounting for 19% of the market. It also operates in Mexico, Canada, China, Turkey and the United Kingdom.[2] The company's subsidiaries include Geek Squad, CinemaNow, Magnolia Audio Video, Pacific Sales, and, in Canada operates under both the Best Buy and Future Shop label. Together these operate more than 1,150 stores in the United States, Puerto Rico, Canada, China,[3] Mexico, and Turkey. In addition, the company has rolled out over 100 Best Buy Express Automated Retail stores or "ZoomShops", operated by Zoom Systems, in airports and malls around the U.S.[4] The company's corporate headquarters are located in Richfield, Minnesota.
Best Buy was named "Company of the Year" by Forbes magazine in 2004,[5] "Specialty Retailer of the Decade" by Discount Store News in 2001,[6] ranked in the Top 10 of "America's Most Generous Corporations" by Forbes magazine in 2005 (based on 2004 giving),[7] and made Fortune magazine's List of Most Admired Companies in 2006.[8]
On March 9, 2009, Best Buy became the primary electronics retail store (online and bricks and mortar) in the eastern United States, after smaller rival Circuit City went out of business. Fry's Electronics remains a major competitor in the western United States. Many locations feature in-store pickup, which can be arranged through the company's website.[9]
Best Buy is also the largest retailer of cellular phones with phones from Verizon Wireless, AT&T Wireless, Sprint PCS, and T-Mobile. They also sell Tablet PC such as the Dell Streak, Apple iPad, Huawei Ideos S7, and Samsung Galaxy Tab. Best Buy also has standalone Best Buy Mobile stores in shopping malls that only sell cellular phones, tablets, Apple iPods, laptops, notebooks, and wireless broadband cards. Best Buy Mobile is also the only cellular phone retailer to feature no mail-in rebates for all of their cellular phones.[citation needed]
In 2011, during the three-month period ended February 26, Best Buy saw its revenue and profits slide, but generated a profit of $651 million on revenue of $16.26 billion. In comparison to the same period in 2010, it tallied $16.55 billion in revenue and a $779 million profit.
Best Buy Co., Inc., incorporated in 1966, is a multinational retailer of consumer electronics, home office products, entertainment software, appliances and related services. The Company operates retail stores and call centers and conduct online retail operations under a variety of brand names, such as Best Buy (BestBuy.com, BestBuy.ca), The Carphone Warehouse (CarphoneWarehouse.com), Five Star, Future Shop (FutureShop.ca), Geek Squad, Magnolia Audio Video, Napster (Napster.com), Pacific Sales, The Phone House (PhoneHouse.com) and Speakeasy. It operates in two segments: Domestic and International. The Domestic segment is consisted of the operations in all states, districts and territories of the United States, operating under various brand names, including, Best Buy, Best Buy Mobile, Geek Squad, Magnolia Audio Video, Napster, Pacific Sales and Speakeasy. The International segment is consisted of all Canada operations, operating under the brand names Best Buy, Best Buy Mobile, Future Shop and Geek Squad; all Europe operations, operating under the brand names The Carphone Warehouse, The Phone House and Geek Squad; all China operations, operating under the brand names Best Buy, Geek Squad and Five Star; all Mexico operations, operating under the brand names Best Buy and Geek Squad and all Turkey operations, operating under the brand names Best Buy and Geek Squad.
Domestic Segment
The Company’s Domestic segment stores operations are organized by store brand. U.S. Best Buy store operations are divided into districts and are under the management of a retail field officer who oversees store performance through district managers. U.S. Best Buy stores have offerings in six revenue categories: consumer electronics, home office, entertainment software, appliances, services and other. Consumer electronics consists of video and audio products. Video products include televisions, navigation products, digital cameras and accessories, digital camcorders and accessories, e-readers and digital versatile disc (DVD) and Blu-ray players. Audio products consist of moving picture experts group layer-3 audio (MP3) players and accessories, home theater audio systems and components, musical instruments and mobile electronics, such as car stereo and satellite radio products. The home office revenue category includes notebook and desktop computers, monitors, mobile phones and related subscription service commissions, hard drives, networking equipment and related accessories, such as printers. The entertainment software revenue category includes video gaming hardware and software, DVDs, Blu-rays, compact discs (CDs), digital downloads and computer software. The appliances revenue category includes appliances, as well as small electrics. The services revenue category consists primarily of service contracts, extended warranties, computer-related services, product repair, and delivery and installation for home theater, mobile audio and appliances. The other revenue category includes non-core offerings, such as snacks and beverages.
U.S. Best Buy Mobile offerings are included in its home office revenue category. Revenue from U.S. Best Buy Mobile stand-alone stores is primarily derived from mobile phone hardware, subscription service commissions from mobile phone network providers and associated mobile phone accessories. Consumer electronics consists of video and audio products. Video products include televisions, DVD and Blu-ray players and accessories. Audio products include home theater audio systems and components, mobile electronics and accessories. The services revenue category consists primarily of home theater system installation, as well as extended warranties. Pacific Sales stores have offerings in three revenue categories: appliances, consumer electronics and services. Appliances consists of appliances, evenly split between high-end and mass-market brands, and plumbing, which consists of kitchen and bath fixtures, including faucets, sinks, toilets and bath tubs. Consumer electronics consists of video and audio products, including televisions and home theater systems. The services revenue category consists primarily of extended warranties, installation and repair services.
International Segment
The Carphone Warehouse and The Phone House stores in Europe have offerings in two revenue categories: home office and services. Home office consists primarily of mobile phone hardware, subscription service commissions from mobile phone network providers and associated mobile phone accessories. Services consists of device insurance operations, providing protection primarily for the replacement of a lost, stolen or damaged handset, as well as mobile and fixed-line telecommunication services, billing management services and Geek Squad repair services. Best Buy Canada and Future Shop stores have offerings in five revenue categories: consumer electronics, home office, entertainment software, services and other, and for Future Shop only, a sixth revenue category, appliances. Consumer electronics consists of video and audio products. Video products include televisions, navigation products, digital cameras and accessories, DVD and Blu-ray players and digital camcorders and accessories. Audio products encompass MP3 players, home theater audio systems and components, mobile electronics, such as car stereo and accessories. The home office revenue category includes notebook and desktop computers, monitors, mobile phones and related subscription service commissions, hard drives, networking equipment and related accessories, such as printers. The entertainment software revenue category includes video game hardware and software, DVDs, Blu-rays, CDs and computer software. The appliances revenue category includes appliances, as well as small electrics. The services revenue category includes extended warranties, repair, delivery, computer-related services and home theater installation. The other revenue category includes non-core offerings, such as snacks and beverages.
Canada Best Buy Mobile offerings are included in its home office revenue category. Revenue from Canada Best Buy Mobile stand-alone stores is primarily derived from mobile phone hardware, subscription service commissions from mobile phone network providers and associated mobile phone accessories. Best Buy China and Five Star stores have offerings in four revenue categories: appliances, consumer electronics, home office and services. Its China stores do not carry entertainment software. Appliances includes major appliances, air conditioners, small electrics and housewares. The consumer electronics revenue category consists of video and audio products, including televisions, digital cameras, MP3 players and accessories. The home office revenue category includes desktop and notebook computers, mobile phones, traditional telephones and accessories. The services revenue category includes extended warranties, repair, delivery, computer-related services and installation. Its Best Buy Mexico and Best Buy Turkey stores have offerings in six revenue categories: consumer electronics, home office, entertainment software, appliances, services and other, with products and services similar to those of its U.S. Best Buy stores.
Despite the completion of this acquisition, Best Buy pushed ahead with a previously planned expansion of the Best Buy chain into Canada, opening eight stores in the Toronto area in the fall of 2002. The company appeared confident that it could successfully operate the dual Canadian brands given their distinguishing characteristics. Meanwhile, in July 2002 Schulze turned over his CEO duties to Vice-Chairman Brad Anderson, who had also served as president and chief operating officer since 1991 and had been with the company since 1973. Schulze remained involved in the company he founded as chairman and continued to be the largest shareholder in the company, owning a stake of nearly 17 percent.
As the Best Buy chain pushed past the 500-store mark in 2003 with the opening of 67 new stores in the United States, including the first stores in Alaska, Idaho, Utah, and West Virginia, the situation at the Musicland chains was deteriorating. Sales at music retailers were ratcheting down not only because of the downloading of music over the Internet that had been made steadily more popular by Napster and other online music services but also because consumers were increasingly buying the cheaper CDs that were now being offered by such mass merchants as Wal-Mart Stores, Inc. and Target Corporation. Musicland's mall-based chains suffered a further blow with the dwindling of mall traffic post-9/11. Best Buy announced in April 2002 that it would rebrand the On Cue stores under the more nationally known Sam Goody name. Then in January 2003, 90 Sam Goody stores were closed, along with 20 Suncoast outlets. Musicland continued to lose money, however, and in March 2003 Best Buy announced it would sell the entire division. During 2003 Best Buy took $410 million in charges to write down the value of its Musicland acquisition, and coupled with additional charges of $90 million, net profits for the year totaled just $99 million. In another early 2003 development, Best Buy shifted its corporate headquarters from Eden Prairie, Minnesota, where it had operated out of eight scattered buildings, to a more compact 37-acre campus in nearby Richfield.
In June 2003 Best Buy offloaded Musicland, essentially giving the unit away to Sun Capital Partners Inc., a private investment firm based in Boca Raton, Florida. Paying no cash in the transaction, Sun Capital simply assumed Musicland's debt and lease obligations. In what was perhaps an understatement, Anderson told the Minneapolis Star Tribune that "this was a very expensive, but a powerful learning experience for Best Buy." Investors reacted positively to Best Buy's return to its roots. The stock had performed poorly ever since the Musicland acquisition, but during the 2003 calendar year, shares of Best Buy ascended 124 percent. In December, Best Buy rewarded those shareholders who had stuck with the company by issuing its first dividend ever of 30 cents per share. In November 2003 the Best Buy chain opened its 600th U.S. store, during a fiscal year in which 78 new Best Buys made their debut. In September, meantime, Magnolia Hi-Fi adopted the more contemporary name of Magnolia Audio Video, a move that accompanied that chain's entrance into the Los Angeles market. Magnolia, now 22 outlets strong, was just beginning to recover from a severe post-9/11 downturn in sales of high-end electronics.
Fueled by a 7.1 percent increase in comparable store sales, the newly refocused Best Buy rebounded with its best year ever in fiscal 2004. Overall revenues rose 17 percent, reaching nearly $25 billion, while net income totaled $705 million. During the next year, Best Buy planned to open 60 more U.S. stores, including the first store in Hawaii, as well as ten Best Buys and three Future Shops in Canada. Faced with the ongoing challenges of shorter product cycles, severe downward pricing pressure, and heightened competition from mass merchants, Best Buy was also in the process of rolling out a new store concept, one the company described as "customer-centric." In addition to featuring more high-tech digital gadgets, particularly products promoting the integration of multiple technologies, the new stores were customized to meet the needs of local markets. They also placed a greater emphasis on high-end electronics coupled with service and installation--taking a page from the Magnolia playbook. Toward this same end, Best Buy had bought Minneapolis-based Geek Squad, Inc. in October 2002 for about $3 million. Founded in 1994, Geek Squad was a computer-maintenance company providing at-home/in-office technology support services. Through these initiatives, Best Buy hoped to stay ahead of its many rivals in what was perhaps the most ruthlessly competitive segment of the retail market.
Principal Subsidiaries: Geek Squad, Inc.; Magnolia Hi-Fi, Inc.; Best Buy Canada Ltd.; Future Shop Ltd. (Canada).
Principal Competitors: Circuit City Stores, Inc.; CompUSA Inc.; Wal-Mart Stores, Inc.; CDW Corporation; RadioShack Corporation; Staples, Inc.; Office Depot, Inc.; Amazon.com, Inc.; Boise Office Solutions; Sears, Roebuck and Co.
OVERALL
Beta: 1.30
Market Cap (Mil.): $12,160.82
Shares Outstanding (Mil.): 389.52
Annual Dividend: 0.60
Yield (%): 1.92
FINANCIALS
BBY.N Industry Sector
P/E (TTM): 10.01 1.10 13.52
EPS (TTM): 1.06 -- --
ROI: 15.88 0.94 1.28
ROE: 19.76 1.43 2.12
Statistics:
Public Company
Incorporated: 1966 as Sound of Music, Inc.
Employees: 80,000
Sales: $24.54 billion (2004)
Stock Exchanges: New York
Ticker Symbol: BBY
NAIC: 443112 Radio, Television, and Other Electronics Stores; 443111 Household Appliance Stores; 443120 Computer and Software Stores; 443130 Camera and Photographic Supplies Stores; 451140 Musical Instrument and Supplies Stores; 451220 Prerecorded Tape, Compact Disc, and Record Stores; 454110 Electronic Shopping and Mail-Order Houses
Key Dates:
1966: Richard M. Schulze and a partner establish Sound of Music, Inc., a home and car stereo store in St. Paul, Minnesota.
1971: Schulze buys out his partner and begins to expand.
1982: After expanding offerings to include appliances and VCRs, revenues reach $9.3 million.
1983: Company changes its name to Best Buy Co., Inc.
1984: Schulze introduces the superstore format.
1985: Company goes public.
1987: Best Buy gains a listing on the New York Stock Exchange; revenues reach $239 million from 24 stores.
1989: Company introduces its Concept II stores, which have a warehouse format and no commissioned sales help.
1993: Revenues soar past the $1 billion mark, reaching $1.6 billion.
1994: Larger Concept III stores, with hands-on information displays, are introduced.
1998: The Concept IV format debuts, featuring more high-tech products, merchandise grouped in such departments as home theater, cash registers throughout the store, and "high touch" areas for digital products where more employee interaction is needed.
1999: Revenues surpass $10 billion.
2000: Best Buy relaunches an expanded bestbuy.com web site; Seattle-based Magnolia Hi-Fi, Inc., operator of 13 high-end consumer electronics stores on the West Coast, is acquired for $88 million.
2001: Best Buy acquires Musicland Stores Corporation, operator of 1,300 music stores, for $685.3 million in cash and assumed debt; also purchases Future Shop Ltd., the largest consumer electronics retailer in Canada, for $368 million.
2003: Some $500 million in special charges, mainly related to the money-losing Musicland operations, cut profits for the fiscal year to $99 million; Best Buy divests Musicland; Magnolia Hi-Fi is renamed Magnolia Audio Video; Best Buy pays its first dividend.
Name Age Since Current Position
Schulze, Richard 70 2002 Chairman of the Board
Dunn, Brian 50 2009 Chief Executive Officer, Director
Muehlbauer, James 49 2008 Chief Financial Officer, Executive Vice President - Finance
Robinson, Ryan 45 2010 Chief Financial Officer, U.S., Senior Vice President
Sheehan, Timothy 46 2010 Chief Administrative Officer, Executive Vice President
Judge, Barry 48 2009 Chief Marketing Officer, Executive Vice President
Ballard, Shari 44 2010 Executive Vice President, President, Americas
Patel, Kalendu 47 2010 Executive Vice President, President, Asia
Vitelli, Michael 55 2010 Executive Vice President, President, Americas
Surface, Carol 45 2010 Chief Human Resources Officer, Executive Vice President
Joyce, Joseph 59 1997 Senior Vice President, General Counsel, Assistant Secretary
Grafton, Susan 54 2006 Chief Accounting Officer, Vice President, Controller
Gould, Christopher 41 2010 Vice President, Treasurer
Kaplan, Elliot 73 1971 Secretary, Director
Paull, Matthew 59 2009 Lead Independent Director
Tyabji, Hatim 65 1998 Director
Higgins Victor, Kathy 53 1999 Director
James, Ronald 59 2004 Director
Rebolledo, Rogelio 66 2006 Director
Mikan, George 39 2008 Director
Vittecoq, Gerard 62 2008 Director
Khosla, Sanjay 59 2008 Director
Caputo, Lisa 46 2009 Director
Address:
7601 Penn Avenue South
Richfield, Minnesota 55423-3645
U.S.A.
Best Buy was named "Company of the Year" by Forbes magazine in 2004,[5] "Specialty Retailer of the Decade" by Discount Store News in 2001,[6] ranked in the Top 10 of "America's Most Generous Corporations" by Forbes magazine in 2005 (based on 2004 giving),[7] and made Fortune magazine's List of Most Admired Companies in 2006.[8]
On March 9, 2009, Best Buy became the primary electronics retail store (online and bricks and mortar) in the eastern United States, after smaller rival Circuit City went out of business. Fry's Electronics remains a major competitor in the western United States. Many locations feature in-store pickup, which can be arranged through the company's website.[9]
Best Buy is also the largest retailer of cellular phones with phones from Verizon Wireless, AT&T Wireless, Sprint PCS, and T-Mobile. They also sell Tablet PC such as the Dell Streak, Apple iPad, Huawei Ideos S7, and Samsung Galaxy Tab. Best Buy also has standalone Best Buy Mobile stores in shopping malls that only sell cellular phones, tablets, Apple iPods, laptops, notebooks, and wireless broadband cards. Best Buy Mobile is also the only cellular phone retailer to feature no mail-in rebates for all of their cellular phones.[citation needed]
In 2011, during the three-month period ended February 26, Best Buy saw its revenue and profits slide, but generated a profit of $651 million on revenue of $16.26 billion. In comparison to the same period in 2010, it tallied $16.55 billion in revenue and a $779 million profit.
Best Buy Co., Inc., incorporated in 1966, is a multinational retailer of consumer electronics, home office products, entertainment software, appliances and related services. The Company operates retail stores and call centers and conduct online retail operations under a variety of brand names, such as Best Buy (BestBuy.com, BestBuy.ca), The Carphone Warehouse (CarphoneWarehouse.com), Five Star, Future Shop (FutureShop.ca), Geek Squad, Magnolia Audio Video, Napster (Napster.com), Pacific Sales, The Phone House (PhoneHouse.com) and Speakeasy. It operates in two segments: Domestic and International. The Domestic segment is consisted of the operations in all states, districts and territories of the United States, operating under various brand names, including, Best Buy, Best Buy Mobile, Geek Squad, Magnolia Audio Video, Napster, Pacific Sales and Speakeasy. The International segment is consisted of all Canada operations, operating under the brand names Best Buy, Best Buy Mobile, Future Shop and Geek Squad; all Europe operations, operating under the brand names The Carphone Warehouse, The Phone House and Geek Squad; all China operations, operating under the brand names Best Buy, Geek Squad and Five Star; all Mexico operations, operating under the brand names Best Buy and Geek Squad and all Turkey operations, operating under the brand names Best Buy and Geek Squad.
Domestic Segment
The Company’s Domestic segment stores operations are organized by store brand. U.S. Best Buy store operations are divided into districts and are under the management of a retail field officer who oversees store performance through district managers. U.S. Best Buy stores have offerings in six revenue categories: consumer electronics, home office, entertainment software, appliances, services and other. Consumer electronics consists of video and audio products. Video products include televisions, navigation products, digital cameras and accessories, digital camcorders and accessories, e-readers and digital versatile disc (DVD) and Blu-ray players. Audio products consist of moving picture experts group layer-3 audio (MP3) players and accessories, home theater audio systems and components, musical instruments and mobile electronics, such as car stereo and satellite radio products. The home office revenue category includes notebook and desktop computers, monitors, mobile phones and related subscription service commissions, hard drives, networking equipment and related accessories, such as printers. The entertainment software revenue category includes video gaming hardware and software, DVDs, Blu-rays, compact discs (CDs), digital downloads and computer software. The appliances revenue category includes appliances, as well as small electrics. The services revenue category consists primarily of service contracts, extended warranties, computer-related services, product repair, and delivery and installation for home theater, mobile audio and appliances. The other revenue category includes non-core offerings, such as snacks and beverages.
U.S. Best Buy Mobile offerings are included in its home office revenue category. Revenue from U.S. Best Buy Mobile stand-alone stores is primarily derived from mobile phone hardware, subscription service commissions from mobile phone network providers and associated mobile phone accessories. Consumer electronics consists of video and audio products. Video products include televisions, DVD and Blu-ray players and accessories. Audio products include home theater audio systems and components, mobile electronics and accessories. The services revenue category consists primarily of home theater system installation, as well as extended warranties. Pacific Sales stores have offerings in three revenue categories: appliances, consumer electronics and services. Appliances consists of appliances, evenly split between high-end and mass-market brands, and plumbing, which consists of kitchen and bath fixtures, including faucets, sinks, toilets and bath tubs. Consumer electronics consists of video and audio products, including televisions and home theater systems. The services revenue category consists primarily of extended warranties, installation and repair services.
International Segment
The Carphone Warehouse and The Phone House stores in Europe have offerings in two revenue categories: home office and services. Home office consists primarily of mobile phone hardware, subscription service commissions from mobile phone network providers and associated mobile phone accessories. Services consists of device insurance operations, providing protection primarily for the replacement of a lost, stolen or damaged handset, as well as mobile and fixed-line telecommunication services, billing management services and Geek Squad repair services. Best Buy Canada and Future Shop stores have offerings in five revenue categories: consumer electronics, home office, entertainment software, services and other, and for Future Shop only, a sixth revenue category, appliances. Consumer electronics consists of video and audio products. Video products include televisions, navigation products, digital cameras and accessories, DVD and Blu-ray players and digital camcorders and accessories. Audio products encompass MP3 players, home theater audio systems and components, mobile electronics, such as car stereo and accessories. The home office revenue category includes notebook and desktop computers, monitors, mobile phones and related subscription service commissions, hard drives, networking equipment and related accessories, such as printers. The entertainment software revenue category includes video game hardware and software, DVDs, Blu-rays, CDs and computer software. The appliances revenue category includes appliances, as well as small electrics. The services revenue category includes extended warranties, repair, delivery, computer-related services and home theater installation. The other revenue category includes non-core offerings, such as snacks and beverages.
Canada Best Buy Mobile offerings are included in its home office revenue category. Revenue from Canada Best Buy Mobile stand-alone stores is primarily derived from mobile phone hardware, subscription service commissions from mobile phone network providers and associated mobile phone accessories. Best Buy China and Five Star stores have offerings in four revenue categories: appliances, consumer electronics, home office and services. Its China stores do not carry entertainment software. Appliances includes major appliances, air conditioners, small electrics and housewares. The consumer electronics revenue category consists of video and audio products, including televisions, digital cameras, MP3 players and accessories. The home office revenue category includes desktop and notebook computers, mobile phones, traditional telephones and accessories. The services revenue category includes extended warranties, repair, delivery, computer-related services and installation. Its Best Buy Mexico and Best Buy Turkey stores have offerings in six revenue categories: consumer electronics, home office, entertainment software, appliances, services and other, with products and services similar to those of its U.S. Best Buy stores.
Despite the completion of this acquisition, Best Buy pushed ahead with a previously planned expansion of the Best Buy chain into Canada, opening eight stores in the Toronto area in the fall of 2002. The company appeared confident that it could successfully operate the dual Canadian brands given their distinguishing characteristics. Meanwhile, in July 2002 Schulze turned over his CEO duties to Vice-Chairman Brad Anderson, who had also served as president and chief operating officer since 1991 and had been with the company since 1973. Schulze remained involved in the company he founded as chairman and continued to be the largest shareholder in the company, owning a stake of nearly 17 percent.
As the Best Buy chain pushed past the 500-store mark in 2003 with the opening of 67 new stores in the United States, including the first stores in Alaska, Idaho, Utah, and West Virginia, the situation at the Musicland chains was deteriorating. Sales at music retailers were ratcheting down not only because of the downloading of music over the Internet that had been made steadily more popular by Napster and other online music services but also because consumers were increasingly buying the cheaper CDs that were now being offered by such mass merchants as Wal-Mart Stores, Inc. and Target Corporation. Musicland's mall-based chains suffered a further blow with the dwindling of mall traffic post-9/11. Best Buy announced in April 2002 that it would rebrand the On Cue stores under the more nationally known Sam Goody name. Then in January 2003, 90 Sam Goody stores were closed, along with 20 Suncoast outlets. Musicland continued to lose money, however, and in March 2003 Best Buy announced it would sell the entire division. During 2003 Best Buy took $410 million in charges to write down the value of its Musicland acquisition, and coupled with additional charges of $90 million, net profits for the year totaled just $99 million. In another early 2003 development, Best Buy shifted its corporate headquarters from Eden Prairie, Minnesota, where it had operated out of eight scattered buildings, to a more compact 37-acre campus in nearby Richfield.
In June 2003 Best Buy offloaded Musicland, essentially giving the unit away to Sun Capital Partners Inc., a private investment firm based in Boca Raton, Florida. Paying no cash in the transaction, Sun Capital simply assumed Musicland's debt and lease obligations. In what was perhaps an understatement, Anderson told the Minneapolis Star Tribune that "this was a very expensive, but a powerful learning experience for Best Buy." Investors reacted positively to Best Buy's return to its roots. The stock had performed poorly ever since the Musicland acquisition, but during the 2003 calendar year, shares of Best Buy ascended 124 percent. In December, Best Buy rewarded those shareholders who had stuck with the company by issuing its first dividend ever of 30 cents per share. In November 2003 the Best Buy chain opened its 600th U.S. store, during a fiscal year in which 78 new Best Buys made their debut. In September, meantime, Magnolia Hi-Fi adopted the more contemporary name of Magnolia Audio Video, a move that accompanied that chain's entrance into the Los Angeles market. Magnolia, now 22 outlets strong, was just beginning to recover from a severe post-9/11 downturn in sales of high-end electronics.
Fueled by a 7.1 percent increase in comparable store sales, the newly refocused Best Buy rebounded with its best year ever in fiscal 2004. Overall revenues rose 17 percent, reaching nearly $25 billion, while net income totaled $705 million. During the next year, Best Buy planned to open 60 more U.S. stores, including the first store in Hawaii, as well as ten Best Buys and three Future Shops in Canada. Faced with the ongoing challenges of shorter product cycles, severe downward pricing pressure, and heightened competition from mass merchants, Best Buy was also in the process of rolling out a new store concept, one the company described as "customer-centric." In addition to featuring more high-tech digital gadgets, particularly products promoting the integration of multiple technologies, the new stores were customized to meet the needs of local markets. They also placed a greater emphasis on high-end electronics coupled with service and installation--taking a page from the Magnolia playbook. Toward this same end, Best Buy had bought Minneapolis-based Geek Squad, Inc. in October 2002 for about $3 million. Founded in 1994, Geek Squad was a computer-maintenance company providing at-home/in-office technology support services. Through these initiatives, Best Buy hoped to stay ahead of its many rivals in what was perhaps the most ruthlessly competitive segment of the retail market.
Principal Subsidiaries: Geek Squad, Inc.; Magnolia Hi-Fi, Inc.; Best Buy Canada Ltd.; Future Shop Ltd. (Canada).
Principal Competitors: Circuit City Stores, Inc.; CompUSA Inc.; Wal-Mart Stores, Inc.; CDW Corporation; RadioShack Corporation; Staples, Inc.; Office Depot, Inc.; Amazon.com, Inc.; Boise Office Solutions; Sears, Roebuck and Co.
OVERALL
Beta: 1.30
Market Cap (Mil.): $12,160.82
Shares Outstanding (Mil.): 389.52
Annual Dividend: 0.60
Yield (%): 1.92
FINANCIALS
BBY.N Industry Sector
P/E (TTM): 10.01 1.10 13.52
EPS (TTM): 1.06 -- --
ROI: 15.88 0.94 1.28
ROE: 19.76 1.43 2.12
Statistics:
Public Company
Incorporated: 1966 as Sound of Music, Inc.
Employees: 80,000
Sales: $24.54 billion (2004)
Stock Exchanges: New York
Ticker Symbol: BBY
NAIC: 443112 Radio, Television, and Other Electronics Stores; 443111 Household Appliance Stores; 443120 Computer and Software Stores; 443130 Camera and Photographic Supplies Stores; 451140 Musical Instrument and Supplies Stores; 451220 Prerecorded Tape, Compact Disc, and Record Stores; 454110 Electronic Shopping and Mail-Order Houses
Key Dates:
1966: Richard M. Schulze and a partner establish Sound of Music, Inc., a home and car stereo store in St. Paul, Minnesota.
1971: Schulze buys out his partner and begins to expand.
1982: After expanding offerings to include appliances and VCRs, revenues reach $9.3 million.
1983: Company changes its name to Best Buy Co., Inc.
1984: Schulze introduces the superstore format.
1985: Company goes public.
1987: Best Buy gains a listing on the New York Stock Exchange; revenues reach $239 million from 24 stores.
1989: Company introduces its Concept II stores, which have a warehouse format and no commissioned sales help.
1993: Revenues soar past the $1 billion mark, reaching $1.6 billion.
1994: Larger Concept III stores, with hands-on information displays, are introduced.
1998: The Concept IV format debuts, featuring more high-tech products, merchandise grouped in such departments as home theater, cash registers throughout the store, and "high touch" areas for digital products where more employee interaction is needed.
1999: Revenues surpass $10 billion.
2000: Best Buy relaunches an expanded bestbuy.com web site; Seattle-based Magnolia Hi-Fi, Inc., operator of 13 high-end consumer electronics stores on the West Coast, is acquired for $88 million.
2001: Best Buy acquires Musicland Stores Corporation, operator of 1,300 music stores, for $685.3 million in cash and assumed debt; also purchases Future Shop Ltd., the largest consumer electronics retailer in Canada, for $368 million.
2003: Some $500 million in special charges, mainly related to the money-losing Musicland operations, cut profits for the fiscal year to $99 million; Best Buy divests Musicland; Magnolia Hi-Fi is renamed Magnolia Audio Video; Best Buy pays its first dividend.
Name Age Since Current Position
Schulze, Richard 70 2002 Chairman of the Board
Dunn, Brian 50 2009 Chief Executive Officer, Director
Muehlbauer, James 49 2008 Chief Financial Officer, Executive Vice President - Finance
Robinson, Ryan 45 2010 Chief Financial Officer, U.S., Senior Vice President
Sheehan, Timothy 46 2010 Chief Administrative Officer, Executive Vice President
Judge, Barry 48 2009 Chief Marketing Officer, Executive Vice President
Ballard, Shari 44 2010 Executive Vice President, President, Americas
Patel, Kalendu 47 2010 Executive Vice President, President, Asia
Vitelli, Michael 55 2010 Executive Vice President, President, Americas
Surface, Carol 45 2010 Chief Human Resources Officer, Executive Vice President
Joyce, Joseph 59 1997 Senior Vice President, General Counsel, Assistant Secretary
Grafton, Susan 54 2006 Chief Accounting Officer, Vice President, Controller
Gould, Christopher 41 2010 Vice President, Treasurer
Kaplan, Elliot 73 1971 Secretary, Director
Paull, Matthew 59 2009 Lead Independent Director
Tyabji, Hatim 65 1998 Director
Higgins Victor, Kathy 53 1999 Director
James, Ronald 59 2004 Director
Rebolledo, Rogelio 66 2006 Director
Mikan, George 39 2008 Director
Vittecoq, Gerard 62 2008 Director
Khosla, Sanjay 59 2008 Director
Caputo, Lisa 46 2009 Director
Address:
7601 Penn Avenue South
Richfield, Minnesota 55423-3645
U.S.A.