4 simple reasons you should buy shares
1.Turning the tables. The company is positioning itself to turn the tables on Amazon.com, Inc. (NASDAQ:AMZN) by making the stores more engaging, the website more functional and user friendly, improving the synergies between the two (i.e buy online, pickup in store), while reducing the corporate cost structure.
2. Not wasting time. Initiatives are happening quickly, as the price matching policy is in full force. In addition, the company reduced SG&A through the “Renew Blue,” which has cut $300 million in spending, and sold its European JV. As mentioned in my previous blog, the “store within store” deals with Samsung and, more recently, Microsoft Corporation (NASDAQ:MSFT) are gaining a lot of attention from clients in addition to a store reset (shown to investors at its recent shareholder meeting) that will give the stores a refreshed, clean look that can increase revenue and gross profit per square foot.
3. More good news coming. It would not be unreasonable to assume that more good news will be announced in the form of additional vendor shops, supply chain improvements, website functionality improvements, and ongoing lease negotiations.
4. Outside environment favorable. The outside economic environment is greatly helping the company drive sales as fears of a slowdown have subsided from a few months ago. As we are approaching the most profitable quarter (77% of annual profits are earned in the fourth quarter) investors should be excited for what has yet to come.
Potential to crush Amazon
As hard as this is to believe, Amazon.com, Inc. (NASDAQ:AMZN) poses very little if no threat to Best Buy Co., Inc. (NYSE:BBY). The price matching guarantee is such a game changer, that “showrooming” (browsing in physical stores and buying the same product online for cheaper) can now be a thing of the past.
An article in the New York Times concluded that if Barnes & Noble were to go bankrupt this will be a big negative for Amazon.com, Inc. (NASDAQ:AMZN), due to an inability for consumers to “showroom.” Now that Best Buy Co., Inc. (NYSE:BBY) customers can receive Amazon prices in Best Buy stores, investors can logically conclude that this is a big negative for Amazon as “showrooming” is a big driver of Amazon sales.
In addition, an online price check of 20 random items has shown that a basket of 20 random items being sold at Best Buy Co., Inc. (NYSE:BBY), Amazon.com and Wal-Mart show that with the price matching policy Best Buy Co., Inc. (NYSE:BBY) is the cheapest option or consumers.
Source: SunTrust
Turnaround partner along for the ride
Microsoft Corporation (NASDAQ:MSFT) is also in the middle of their turnaround story as the “store-within-a-store” will begin opening this month and will offer the company’s entire repertoire including Windows-based PCs, tablets, Xbox and accessories. This is a win-win for both companies that are each trying to establish a strategic way forward. The deal also makes sense as Best Buy Co., Inc. (NYSE:BBY) has prime floor space up for grabs, which Microsoft can take full advantage of with well-trained knowledgeable staff that can offer live demonstrations of all Microsoft products. The partnership is looking promising as Microsoft Corporation (NASDAQ:MSFT) Xbox One has already sold out at Best Buy.
My take
Best Buy Co., Inc. (NYSE:BBY)’s moves will improve its competitive position considerably and I believe the four key points I outlined will establish the company as the dominant ‘go to’ retailer for all things electronics. Once the company’s plans are completed, the entire store network will be able to offer customers a complete leg up on shipping, pricing, and convenience that many competitors can not match.
The article Why I Still Love Best Buy originally appeared on Fool.com and is written by Jayson Derrick.
Jayson Derrick has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com and Microsoft. Jayson is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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