Morningstar Rating

Stock Research and Analysis

by R.J. Hottovy, CFA

Bulls Say

Best Buy has cut $965 million from its annual cost structure through space redesigns, cost of goods sold optimization, and SG&A reductions, and is targeting a total of $1 billion in cost reductions through reduced returns/replacements/damages as well as logistics and supply chain enhancements.
Best Buy has re-engineered its online platform, improving the user experience and facilitating greater ship-from-store fulfillment capabilities (now offered in 1,400 stores).
New television, smartphone, tablet, and gaming technology innovations can provide periods of top-line outperformance. Read more 

Bears Say

Mass merchants, warehouse clubs, online retailers, and consumer product OEMs are all vying for market share, resulting in increased price competition and limited longer-term margin expansion opportunities.
Entertainment software sales remain on a downward trend. Replacement categories in stores will likely be slower-turning, lower-margin products.
Warranty sales have historically been a disproportionate contributor to margins. If consumers gravitate to rival consumer electronics retailers or make more purchases online, there could be a profitability hit from the lost warranty sales. Read more 

Management

Hubert Joly was named president and CEO and appointed to the board in August 2012. Before taking the reins at Best Buy, Joly was CEO of hospitality/travel company Carlson and also held executive roles with Vivendi's video game business unit, Electronic   Read more 

Profile

Best Buy is the largest U.S. consumer electronics retailer, with our product sales forecast representing 16% of the $211 billion market in fiscal 2015 using estimates from   Read more 

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