Boston, MA 06/04/2014 (wallstreetpr) – The intensive competition from online stores saw Best Buy Co Inc (NYSE:BBY) suffer sales decline in 1Q2014. Although the consumer electronic retailer anticipates continued fall in sales in 2Q and 3Q, it expects 4Q to show improvement in its top-line. However, before then, Best Buy has a formula that it believes will support stronger bottom-line amid weak sales.
The key formula that the retailer has taken up is cost-cutting. In making internal cost and expenses improvements, Best Buy is not only able to price its merchandise competitively to ward off the impact of online stores, but cost-cutting also enables the company to makes big financial savings. The money saved through cost-cutting can be redeployed into the business to improve performance through strategic investments or returned to shareholders in the form of hiked dividends and shares repurchase.
In the recent times, the retailer has taken aim at its store management where it is reducing management positions to trim operating expenses. Reduction of store numbers is also a strategy that appears to be paying off for Best Buy Co Inc (NYSE:BBY).
In addition to cost-cutting, the retailer is also revamping its merchandise. Introduction of new products with higher profit margin is supporting the company’s bottom-line campaign. Additionally, the consumer electronic retailer is also investing in employee training. Training employees enhances customer experience especially where services and advice are required.
Retail competition
Best Buy Co Inc (NYSE:BBY), like most other traditional retailers today, is facing competition from e-commerce and discounters such as Amazon.com Inc (NASDAQ:AMZN). In the competitive environment, BBY, under CEO Hubert Joly, not only seeks innovating ways to drive up sales, but is also pursuing efficiency aggressively so that investors can have a good reason to stick with the company even in challenging times such as these ones.
Overcoming market challenges
Although customers held off spending in 1Q in anticipation of new smartphone and tablet launches in the fall, Best Buy Co Inc (NYSE:BBY) managed post encouraging earnings in the quarter. It earned a profit of $1.31 per share, better than a loss of $0.24 per share in the same quarter last year.
