Domestic Segment Pushing Revenue Growth For Best Buy

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Trefis
BBY: Best Buy logo
BBY
Best Buy

Best Buy (NYSE: BBY), whose stock is currently trading at around $67.50, generates its revenue primarily from its Domestic segment which is projected to account for 91.8% of total revenues in 2020 (ended January 2020), while the International segment is expected to contribute around 8.2% to the Top line in 2020. In this note we discuss the revenue segments of Best Buy, their historical performance, and expected Total Revenue for 2020. You can look at our interactive dashboard analysis ~ Best Buy’s Revenues: How does Best Buy make money? ~ for more details. In addition, here is more Multiline Retail data.

 

Best Buy’s Business Model:

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What Does Best Buy offer?

  • Best Buy was incorporated in the state of Minnesota in 1966. The company strives to enrich the lives of consumers through technology. They have offerings in six revenue categories: Computing and Mobile Phones, Consumer Electronics, Appliances, Entertainment, Services, and Other.
  • These categories provide products and services to their customers that address key human needs across a range of areas, including entertainment, productivity, communication, food preparation, security, and health and wellness. They have operations in the U.S., Canada, and Mexico.

Has 2 Operating Segments:

  • Best Buy Domestic Segment: The Domestic segment is comprised of the operations in all states, districts, and territories of the U.S. under various brand names including Best Buy, bestbuy.com, Best Buy Direct, Best Buy Express, Best Buy Mobile, Geek Squad, GreatCall, Magnolia, and Pacific Kitchen and Home.
  • Best Buy International: The International segment is comprised of all operations in Canada and Mexico under the brand names Best Buy, Best Buy Express, Best Buy Mobile, Geek Squad, and the domain names bestbuy.ca and bestbuy.com.mx.

What Are The Alternatives?

  • Major competitors are local electronics stores and companies like Costco, Amazon, Target, and Walmart.

What Is The Basis of Competition?

  • Price is of great importance to most customers, and price transparency and comparability continues to increase, particularly as a result of digital technology. Further, customers are increasingly seeking faster, guaranteed delivery times, and low-price or free shipping which adds to the basis of competition.

 

Best Buy’s Total Revenue has grown by 8.8% between 2017 and 2019, and is expected to grow by 1.4% in 2020

  • Best Buy’s total revenues grew from $39.4 billion in 2017 to $42.9 billion in 2019. This represents an increase of approximately 8.8%.
  • We forecast the revenues to be around $43.5 billion in 2020, reflecting a increase of 1.4% y-o-y primarily due to the improvement in the Domestic segment.

Revenue growth of about $3.5 billion over two years driven primarily by Domestic Segment:

  • Best Buy Domestic Segment is the highest contributor to Total revenues and has a good growth over recent years. It grew from $36.2 billion in FY 2017 to $39.3 billion in FY 2019. Trefis estimates revenue to be $39.9 billion for FY 2020 (ended January 2020).
  • Revenue from Best Buy International has seen a steady growth over recent years. It grew from $3.2 billion in FY 2017 to $3.6 billion in FY 2019. Trefis estimates revenue to be nearly flat at around $3.6 billion for FY 2020 (ended January 2020).

 

 

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