Best Buy Turns To Next Growth Chapter, Focus On Healthcare

Best Buy Co., Inc. (NYSE:BBY) is aiming high, banking on plans to exploit areas of potential to the fullest. The key growth initiatives underlined by the company are Best Buy Health and supply chain transformation. Naturally, it is committed toward strengthening partnerships with vendors, focusing on offering services and solutions to meet varied customer needs, and optimizing costs. These endeavors are expected to lift the company's top line and overall profitability.

The company’s long-term financial goal is the testimony to the same. Management now envisions enterprise revenue of approximately $50 billion with adjusted operating income rate of 5% by 2025. The consumer electronics retailer also intends to reduce costs by about $1 billion by the said period. The revenue target looks achievable, when compared with fiscal 2020’s revenue projection of $43.1-$43.6 billion.

Notably, under the next phase of its “Building the New Blue” program called “Building the New Blue: Chapter Two”, Best Buy’s top most priority will be to pursue growth opportunities, better execution in key areas, cost containment, and investing in people and systems.

It is making a significant headway into healthcare technology business by undertaking strategic buyouts in the space. The series of purchases include, GreatCall, a major connected health technology company. It also acquired Critical Signal Technologies that provides personal emergency response systems and telehealth monitoring services for seniors at home. The company acquired BioSensics, a provider of wearable sensor technologies for clinical research and medical applications.

According to a report from Morgan Stanley (NYSE:MS), Best Buy is well poised to generate revenue of about $11-$46 billion from its commercial health business in the long run.

Meanwhile, the company has been progressing well with programs like Total Tech Support, which provides support for fixing computers, laptops, appliances, smart home devices and connected devices. Further, Best Buy expanded its In-Home Advisor program to core U.S. markets. The program includes advisors, who guide customers to find out the right technology solutions and provide free in-home consultations.

All said, the company’s long-term endeavors look impressive. Best Buy CEO Corie Barry stated, “We are excited about what we have accomplished so far, and we believe we will continue to enrich our customers’ lives through technology and unlock profitable growth as we execute on the next chapter of this strategy.”

Shares of this Zacks Rank #3 (Hold) company has surged 26.1% so far in the year, outperforming the industry’s growth of 22.8%.

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