Less than a year ago, Best Buy wasn't exactly everyone's favorite stock pick. Many had dismissed the tech retailer as the next brick-and-mortar casualty of Amazon's online commerce blitz, and the company was trading for around $11.29 at the end of December 2012, its lowest point in five years.

Then came 2013, and with it, a gradual ascent back into the market's favor. Now, Best Buy's stock price has rebounded a full 160%, but is the dramatic increase well-deserved, or just a fluke?

Belle Joly
The person perhaps most responsible for Best Buy's resurgence is Hubert Joly, its new CEO. Joly first came on board in the latter half of 2012, a few months before the company hit its five-year low point, and he has fiercely lobbied to get Best Buy's online sales on par with Amazon's. Last year, 6% of Best Buy's total revenue was from online sales, and the company ensnared 7% of the U.S. online electronics market share (Amazon, meanwhile, took 21%, taking the top spot while Best Buy held 11th).


Joly believes Best Buy can eventually grow its online earnings to 2.5 times their size, which would make it much more viable competition for Amazon. One way he intends to expedite this plan is by shipping online orders from select stores instead of online distribution centers, a tactic that could save major funds.

Additionally, Joly has aggressively tried to trim the fat by redesigning floor space, cutting costs on many products, and reducing the amount of less popular offerings like CDs. To top it off, the company is selling off all of its share in Best Buy Europe to its joint venture partner, Carphone Warehouse, for $775 million. This is more than just spring cleaning.

The latest report
Joly's intentions are clearly noble and the market is responding positively, but are his efforts actually working?

Judging from the latest quarterly earnings call, some of Best Buy's statistics are performing a bit more sluggishly than Wall Street would like to admit. Revenue, for instance, came in at around $9.3 billion, down 9% from the same time last year. However, the company's operating margin has improved significantly, rising from 0.1% last quarter to 1% this time around, thanks to a significant decrease in SG&A spending. Even if these figures are extremely small, it's still progress.

Looking farther down the income statement, however, we start to see some unsightly negative numbers. Net income for the quarter was negative $81 million, which is actually a huge improvement compared to the negative $1.7 billion on the books during the quarter of February 2012. Joly's efforts appear to have made a dent, but he's got a long way to go.

Is it really a best buy?
The market may be a little early to the party when it comes to celebrating Best Buy. The company's new CEO is working hard to turn his ship around, and has already made a positive impact. But Rome wasn't built in a day, and Best Buy isn't going to reinvent its online commerce platform overnight. The company's not a goner, but would-be long-term investors might want to wait a little longer to see whether Best Buy's financials continue to improve.

Best Buy isn't the only retailer that has had to adapt to e-commerce. The industry is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only those most forward-looking and capable companies will survive, and they'll handsomely reward those investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.

The article Has Best Buy Come Back From the Dead? originally appeared on Fool.com.

Fool contributor Caroline Bennett has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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