Best Buy S Turn Around Strategy

13959 Words Jun 19th, 2015 56 Pages
For the exclusive use of W. Zhou, 2015.

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MARNE L. ART HAUD- DAY
FRA NK T. ROT HAE RME L

Best Buy’s Turn-Around Strategy (2013)

CEO HUBERT JOLY BREATHED A SIGH OF RELIEF as he reviewed the 2012 end-of-year holiday revenue figures for Best Buy. After perhaps the most tumultuous year ever in the life of the company, he knew the numbers could be much worse. Despite being the world’s largest retailer of consumer electronics with $50 billion in annual sales, Best Buy’s financial situation was precarious. The company’s stock price had fallen from $45 to $15 per share over the past two years, a drop of roughly 60 percent.1 While revenues had been increasing at a marginal rate, both comparable store sales and overall
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© by Arthaud-Day and Rothaermel, 2015.
This document is authorized for use only by Wenhan Zhou in COMM taught by Abdulrahman Chikhouni , at Concordia University - Canada from January 2015 to April 2015.

For the exclusive use of W. Zhou, 2015.
Best Buy’s Turn-Around Strategy (2013)

premium gadgets and trendy stores, which dominated the market’s high-end segment. Carving out a unique niche in this crowded, post-big-box, digital-retail world would not be easy, but it was the only way for Best Buy to avoid the same fate as the now-defunct Circuit City. The recent holiday results were encouraging, but investors were already clamoring for more details on what Joly’s next steps would be.

A Brief History of Best Buy
Together with his business partner, James Wheeler, Richard Schulze founded Sound of Music, an audio specialty store, in Minnesota in 1966. The fledgling company ended its first fiscal year with gross sales of $173,000, and continued to grow rapidly over the next few years. By the time of its initial public offering in 1969, the hometown enterprise had acquired two of its local competitors12 and had opened two new outlets near the University of
Minnesota in downtown Minneapolis.
Schulze bought out Wheeler in 1971,13 shortly after Sound of Music hit the $1 million mark in annual revenues.14 Subsequent years saw continued expansion through additional locations, new product lines, and novel
promotional

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