No question, it’s been a crazy ride for stocks since the start of the year. Unprecedented gains have taken the Dow Jones Industrial Average and the Standard & Poor’s 500 Index to record territory on more than one occasion. While market participants expected the benchmarks’ milestones, what wasn’t expected was Best Buy Co., Inc. (NYSE:BBY)‘s impressive performance.
The big-box retailer was left for dead at the start of the year. Among reasons cited were waning sales, store closings, steep competition from the likes of heavyweights such as Amazon.com, Inc. (NASDAQ:AMZN) and Apple Inc. (NASDAQ:AAPL), and chatter about the struggling retailer going private. However, in a surprising reversal, shares are up some 112% year-to-date, making it the best performer in the S&P 500.
For the quarter ending Feb. 2, Best Buy Co., Inc. (NYSE:BBY) reported its first same-store sales gain in more than a year. It also slashed its loss to $409 million from $1.82 billion in the same quarter a year ago. Those are some inspiring numbers. Moreover, shares should enjoy further gains.
Best Buy shares were boosted 16% in the first week of April after announcing a new partnership with Samsung Electronics Co. Under the new collaboration, Samsung will operate its own stores within all of Best Buy Co., Inc. (NYSE:BBY)s’ more than 1,500 stores by June. Best Buy staff will be trained to run them and assist customers with any questions and concerns.
Samsung has stung Apple Inc. (NASDAQ:AAPL) with its new “not-your-parents” Galaxy smartphones. In the last three months of 2012, the Korean mobile maker reported a 76% jump in profits, record revenue, and an estimated 63 million smartphone sales. In Q2 of 2012, Samsung sold twice as many smartphones as Apple Inc. (NASDAQ:AAPL) and surpassed Nokia Corporation (ADR) (NYSE:NOK) to become the overall top manufacturer of handsets.
While Best Buy has special sections in stores set aside for Apple Inc. (NASDAQ:AAPL) products, the Samsung boutiques. will be much larger.
The new stores withing stores should bring plenty of traffic into Best Buy Co., Inc. (NYSE:BBY) locations, which is likely to lead to notable impulse buying. Customers looking for hands-on help and a brick-and-mortar location to take phones for service and assistance are other pluses.
Best Buy also recently launched its “low price guarantee” program. Its stores will match advertised prices from all local retailers as well as 19 major online competitors including Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), Dell Inc. (NASDAQ:DELL), Hewlett-Packard Company (NYSE:HPQ) and others.
Analysts have taken note. Several have become more optimistic about Best Buy’s prospects. In a March 27 research report, Piper Jaffray reiterated its “Overweight” rating on BBY with a $26 price target. Stifel Nicolaus and BB&T Capital markets rate shares a “Buy,” and Barclays too has an “Overweight” on shares.
Meanwhile, the outlook for Amazon.com, Inc. (NASDAQ:AMZN) has been trimmed by several analysts. The online retailer faces mounting pressure to collect state sales taxes, and it has lost some of its pricing advantage thanks to Best Buy’s new low price guarantee.
In this world of instant gratification—I want and I need it now—Best Buy Co., Inc. (NYSE:BBY) has an edge. It can deliver immediately.
It’s been a long while since Best Buy Co., Inc. (NYSE:BBY), the world’s biggest consumer electronics retailer by sales, has lived up to its name. But efforts at a turnaround are paying off for the company and shareholders.
Diane Alter has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Apple. The Motley Fool owns shares of Amazon.com and Apple.
