5 Things You Didn't Know About Best Buy
Best Buy has been one of this year's hottest retailers. Shares of the consumer-electronics chain have more than tripled this year, and every indication seems to suggest that CEO Hubert Joly has made great strides in restoring the brand while shaving costs that are being passed along to shoppers in the form of more competitive prices.
However, there's probably a lot that you don't know about the country's largest stand-alone retailer. Let's look at a few nuggets.
1. Comps still haven't bounced back
Based on its revised fiscal year (which now ends in February instead of January), Best Buy has posted negative same-store sales for 10 consecutive quarters. That may come as a bombshell to those who have seen Best Buy's stock soar this year. Oh, and the store-level performance is actually worse than the metric suggests. Best Buy is one of the growing number of retailers that take their online sales -- and that's been positive at BestBuy.com -- and divide it into the established store count to pad comps.
2. Best Buy doesn't sell as many appliances as other chains
Appliance sales are booming as part of the housing market's recovery, and it's easy to assume that Best Buy makes a lot of money on them. This is a major part of any consumer-electronics superstore, after all. Appliances accounted for 52% of sales at hhgregg in its most recent quarter. They made up 29% of the revenue mix at Conn's , but that figure would also balloon to 52% if you tacked on furniture and mattresses, which made up nearly 23% of its sales.
Best Buy, on the other hand, saw appliances account for just 8% of its total sales in its latest quarter. Sure, all it takes is one $1,800 refrigerator to offset 30 purchases of $60 video games or 900 purchases of $20 DVDs, but this should be a bigger number for Best Buy, and it may explain why Conn's and hhgregg posted positive comps in their most recent outings.
3. Best Buy once owned a record store and a reborn music-piracy site
In a move that was doomed from the start, Best Buy acquired the Musicland record-store chain in 2001. It was a lousy time to buy into music. CD sales were peaking, but piracy was starting to become a concern as peer-to-peer file-sharing grew in popularity. The once-profitable Musicland was posting big losses when Best Buy unloaded the chain two years later.
The company also eventually wound up buying Napster -- the file-sharing poster child that mortally wounded the music industry -- but only after it had repositioned itself as a legal music service. That acquisition didn't last long at Best Buy, either.
4. Sound of Music was Best Buy's original hokey name
The hills are alive with the sound of retail.
Founder Richard Schulze and his partner opened their first consumer-electronics store in 1966 as "Sound of Music." Unlike the Musicland acquisition, this wasn't a vinyl shop. It specialized in stereo systems for the car and home. As it began to stock up on VCRs, appliances, and other consumer-electronics gadgetry, it needed a new moniker. In 1983 the retailer named itself Best Buy, embracing the superstore concept.
It went public two years later, raising a mere $8 million.
5. Circuit City's liquidation wasn't an initial victory for BestBuy
When rival Circuit City closed its remaining 500-plus stores in early 2009, Best Buy figured it would be the obvious beneficiary, capitalizing on having one less bricks-and-mortar superstore chain to compete against.
Well, it didn't pan out that way. Holiday sales fell at Best Buy later that year. Comps slumped 6.8% at domestic stores during its first December sans Circuit City. The slumping economy played a major part in that. Holiday sales rose dramatically the following December, but as I pointed out earlier, comps have remained largely negative since then.
Look beyond Best Buy for three retailers that are killing it these days
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