BBY Overview

Founded in 1966, Best Buy Co. Inc. (BBY) was originally opened as an audio specialty store known as Sound of Music by Richard Schulze and James Wheeler in St. Paul, Minnesota. Through trials and tribulations, Best Buy is now a Fortune 500 company with foreign operations in Canada, Mexico and China. Within the U.S., Best Buy is the largest specialty retailer of consumer electronics in the country, accounting for more than 21% of market share.

Within the company’s business model, Best Buy offers various video products, including televisions, digital cameras and accessories, digital camcorders and accessories, and DVD players. The company also promotes audio products, such as MP3 players and accessories, navigation products, and home theater audio systems and components, as well as mobile electronics, including car stereo and satellite radio products.

Early on, the company, operating as Sound of Music, made key acquisitions in 1967 of Kencraft Hi-Fi Co. and Bergo Co., while opening their second and third stores in the greater Minneapolis area. By the end of that year, the company ended its first year of business with gross sales of $173,000. Three years later, the company eclipsed the $1 million mark in annual sales for the first time.

With the introduction of the VCR and laserdisc in 1979, Sound of Music becomes the first supplier and retailer of these types of equipment in the Midwest with such brand names as Sony, Sharp, Magnavox, and Panasonic. More than a decade later, in 1983, Sound of Music changes their name to Best Buy Co. Inc. Two years later, Best Buy debuts on the NYSE under the symbol BBY with an initial offering of 8.3 million shares.

With the company steadily expanding, and eclipsing the $1B annual revenue mark in 1992, Best Buy broadened their product-line. In addition to the audio and video supplies, Best Buy began including other home-office products that were comprised of notebook and desktop computers, monitors, mobile phones, hard drives, networking products, and accessories; and entertainment software, including video gaming hardware and software, DVD movies, CDs, and computer software.

Furthermore, Best Buy now provides kitchen appliances, plumbing fixtures, air conditioners, small electrics, and housewares. Not to mention broadband, voice, data, and information technology services, computer-related services, and product repair services.

Best Buy operates retail stores and Websites under the brand name BestBuy.com, along with BestBuy.ca, BestBuy.com.cn, and BestBuyMobile.com, Five Star (Five-Star.cn), Future Shop (FutureShop.ca), Geek Squad (GeekSquad.com and GeekSquad.ca), Magnolia Audio Video (MagnoliaAV.com), Pacific Sales Kitchen and Bath Centers (PacificSales.com) and Speakeasy (Speakeasy.net).

As of March 2008, the company operated 923 Best Buy stores throughout the U.S., 51 Best Buy stores in Canada, and 1 Best Buy store in China, as well as 19 Pacific Sales stores, 13 Magnolia Audio Video stores, 9 Best Buy Mobile stand-alone stores, 7 Geek Squad stand-alone stores, 131 Future Shop stores, and 160 Five Star stores.

The company currently operates in two very distinct business segments, Domestic and International. Within their domestic portion, the company consists of all U.S.-based Best Buy stores and online operations, including Geek Squad, Magnolia Audio Video, Pacific Sales Kitchen and Bath Centers (Pacific Sales) and Speakeasy.

In May 2007, the company acquired Speakeasy, which provides broadband, voice, data and information technology services. In March 2008, Best Buy acquired Pacific Sales, which specializes in the sale of kitchen appliances, plumbing fixtures, home entertainment products and home furnishings, with a focus on builders and do-it-yourself remodelers. By the end of October 2008, Best Buy owned a collective stake of nearly 86% of Napster, Inc.

The international division is comprised all Canadian stores, call centers and online operations, including Best Buy, Future Shop and Geek Squad, as well as all of China’s stores, call centers and online operations, including Best Buy, Geek Squad and Jiangsu Five Star Appliance Co. Its International segment offers products and services similar to that of its domestic counterpart.

Best Buy currently competes with Wal-Mart Stores Inc. (WMT), Costco Wholesale Corp. (COST), hhgregg Inc. (HGG), Target Corp. (TGT) and RadioShack Corp. (RSH). The company did compete with now defunct Circuit City Stores Inc. (CC), before the company’s final closing in January 2009.

By BetterTrades