The US consumer electronics giant has recently earned doubled profits and has seen a more than expected sales rise this year after depressed sales of around a period of seven quarters. The company also applied cost cutting strategies to increase its revenue by decreasing costs. The company saw a 10% increase in shares before the markets opened. Due to the effective cost cutting techniques they managed to reduce its costs by 5% and doubled their operation margins by 2%.
The Chief Executive Officer launched an initiative called the renew blue under, led by himself under which the company has been continuously downsizing since 2012 and has fired a number of managers. The company has also been shutting down stores and cutting jobs and has been booming its cash reserves for two years to reduce its decreasing sales. The company has however finally managed to get out of the crises and earn more than expected this year.
Since the past few years the company has been facing an extremely intense competition from its rivals like Amazon.com. Amazon has an upper hand because of its online services which the customers prefer for purchasing electric appliances and other items like laptops, smart phones and tablets rather than from other multinational retailers. If the company is put in a business cycle then 2014 can be called a year of recovery for the company.
The company is now recovering from a depression of almost 2 years as its sales increased by 2.3% to $7.99 billion caused by the increasingly high demands for televisions, LCDs, smart TVs, personal computers, laptops ,tablets, phablets, mobile phones and other electric appliances. While the same store sales saw an overall increase of 3.2% in the first four quarters of the year, the total revenue saw a slight increase rising to $9.38 billion from a previous of $9.32 billion.
This resulted in the doubling of the net income of Best Buy (NYSE:BBY) to $107 million; an increase to 30 cents per share from a previous of $54 million and 16 cents per share. This is a great achievement for the company’s management, which seems determined to take the business back to its booming stage. Apart from the company’s items, the company earned 32 cents per share as well. The analysts were however expecting revenue of $9.33 billion on 25 cents per share as reported by Reuters.
In 2013 the company’s taxation rate also declined from 44.4 to 39.4% in the third quarter due to a decrease in sales. According to the management they are expecting almost flat revenue because of a sudden decrease in demand for mobile phones in this third quarter. Despite the doubled sales, the company’s shares have declined by 11% on Wednesday’s market closing at $35.5 on the New York Stock Exchange.