Some serious advice from a former bestbuy employee
I first want to put out there that I have no positions on this stock. I worked at best buy for about one year. During that time I saw many things. I saw employees hired with little to no training get thrown on to the sale floor. I saw hideous markups on cables and accessories, and outright lies from sales personnel to customers in order to profit and pad the workers numbers. However they are bringing drastic measures to improve their business structure. They introduced store wide bonuses for employees as an incentive to better sales. Employees do not make pure commission but are tracked by notional margin per hour. Each employees number is measured in profit per hour and tracked by management. If your numbers are low they further you training. They also are heavy on learning about products by elearnings which are on a employee site. This helps staff become more knowledgeable on products.
Best buy stores are definitely bleeding though. They have big spaces and most departments in my store do not make budget for the month. The stores need to be downsized badly. There is no margin on alot of the big ticket items which requires employees to add accessories or protection plans. Which can be difficult on the younger more savvy techies. However most people over 40 are very much interested in hearing what best buy offers as far a help and services. However the number of ppl open to these plans will diminish as people become more tech savvy. Best buy is trying to price match amazon which i doubt will help all that much because the people who know about amazon will not walk into best buy in the first place.
All hope at best buy is not lost. Best buy mobile which has standalone stores as well as sections in best buy is extremely profitable. Margins on on the phones and data plans is insane. Bestbuy also sell zagg shield installtions which are all profit. employees in mobile are very clean cut looking and smart. Bestbuy makes money on almost all aspects related to mobile. Even activation checks. The protection plans in my old bestbuy sell on over 50% of the phones that go out. Thats because the plan relative to the cost of the phones is cheap. Phones are about 600 dollars for a high end model. A 2 year 160 dollar plan gets you a new one if you break it at all except for full water submersion or extreme conditions like throwing it out of your car window. These in comparison to the computer protection plans which are not a great value are a no brainer. A full two year computer plan on A 600 dollar computer plan is around 300 if i remember correctly. ( which for what it concludes is good but not appealling to customers).
Best buy mobile offers all carriers which people love! The discounts are also automatic in store. Which means no annoying mail in rebate. Which customers think is great. All in all bestbuy mobile is this companies savior. If they close unproductive stores and can downsize existing departments to help their sales. Best buy will be able to stick around in the long run. Sorry for the wall of text and the wacky order of ideas. But this was a spur of the moment thing.
Longs there is hope! If restructered correctly by a good ceo this company will turn out great. However shorts will be able to capitalize on the stock depending on who is hired and how the plan goes.
Racket, From my view, it truly sounds like you worked there. Very insightful.
The one statement you made, "The stores need to be downsized badly", is something I've heard frequently . I too believe if the stores were downsized and online biz continues to thrive, their chance for success is there. Problem is, "downsizing" comes at an enormous cost. When you close stores and restructure the model, you are bleeding cash while trying to compete with others that have a business model intact. That's one big dilemma. Good luck to you! : )
Wow, two good posts in a row, the delusional longs must take the weekend off. Seriously, the only way for Best Buy to survive is to change their buisness model. That is very risky but if they do not they are doomed. I do not think they can survive even if they do change, Radio Shack tried to change and they are a 2.40 cent stock, but at least they survived so far. Which even way they choose, This will be an under 10 dollar stock sometime in 2013.