Best Buy (BBY 0.20%) has proven that it has found a formula to survive for the long-term. CEO Hubert Joly deserves credit for that as he led the turnaround that investors now seem to accept as being a real thing.
Image source: YCharts.
What happened
Shares in the electronics retailer jumped immediately after the chain reported its Q1 2018 results. After closing April at $51.81 the company's stock price finished the month at $59.39, a 14% increase according to data provided by S&P Global Market Intelligence.
Best Buy has found a mix that works in the internet age. Image source: Best Buy.
So what
Best Buy actually had a solid fiscal 2017 but investors seemed concerned in Q4 when same-store sales dropped. That changed in Q1 2017 when domestic comparable-store sales rose 1.4% and international comparable-store sales climbed by 4%. In addition domestic online comparable sales spiked by 22.5%. Overall revenue also climbed slightly from $8.4 billion to $8.5 billion, about the same amount that domestic sales rose by.
"We are pleased today to report strong top and bottom line results for the first quarter of fiscal 2018," said Joly in the earnings release. "Our Q1 performance reflects the strength of our customer value proposition and continued momentum in the execution of our strategy. I want to thank all our associates across the company for their hard work in delivering these results."
Now what
Joly has said that Best Buy has moved past its turnaround stage. That does not mean the company is going to grow explosively, but it has found solid footing. The CEO has found the right mix of cost cutting and changing the company's business in order to position his chain for the long run.
In the immediate future Best Buy should profit from the recent bankruptcy and liquidation of regional rival H.H. Gregg. That takes one physical player off the board, but, of course, the real rival is the internet. Joly appears to have positioned his company to deal with that threat and while growth may be slow, the chain looks well-positioned to survive and eventually thrive.
