Best Buy
Baskersfield, CA
Best Buy Co., Inc. operates as a retailer of technology products, services, and solutions in the United States, Canada, and Mexico. The company operates through two reportable segments, Domestic and International. Its stores provide consumer electronics, such as home theater, home automation, digital imaging, health and fitness, and portable audio products; computing and mobile phones, including computing and peripherals, networking, tablets, smart watches, and e-readers, as well as mobile phones comprising related mobile network carrier commissions; and entertainment products, such as gaming hardware and software, movie, music, technology toy, and other software products.
The company’s stores also offer appliances, which include refrigeration and laundry appliances, dishwashers, ovens, coffee makers, blenders, etc.; and other products comprising snacks, beverages, and other sundry items. In addition, it provides services, such as consultation, design, delivery, installation, set-up, protection plan, repair, technical support, and educational services. The company offers its products through stores and Websites under the Best Buy, bestbuy.com, Best Buy Mobile, Best Buy Direct, Best Buy Express, Geek Squad, Magnolia Home Theater, Pacific Kitchen and Home, bestbuy.com.ca, and bestbuy.com.mx brand names, as well as through call centers. It has approximately 1,200 large-format and 400 small-format stores. The company was formerly known as Sound of Music, Inc. Best Buy Co., Inc. was founded in 1966 and is headquartered in Richfield, Minnesota.
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S&P Outlook: Stable
Moody Outlook: Stable
Typical Lease Characteristics
Lease Term: 15 – 20 Years Years
Lease Type: Absolute NNN
Lease Increases: 10% Every 5 years
Lease Extensions: 4-5 (5) Year Options
Lease Guarantor: Corporate
Tenant Overview
Best Buy Co., Inc. is an American multinational consumer electronics retailer headquartered in Richfield, Minnesota. It was originally founded by Richard M. Schulze and James Wheeler in 1966 as an audio specialty store called Sound of Music.
In late 2012, Best Buy stock was left for dead by Wall Street. The company was presumed to be a natural victim of Amazon.com, Inc. (NASDAQ:AMZN). Comparable sales growth was hugely negative. Margins were compressing rapidly. Earnings were falling off a cliff. Nothing looked good for Best Buy.
But then things started to change in 2013. Comparable sales growth started to become less negative. By 2015-16, comps turned into positive territory. And recently, comparable sales growth has taken off like a rocket ship, with a 9% gain in the most recent quarter. Meanwhile, margins bottomed in fiscal year 2014, and then started to rebound. Now, operating margins are roughly 200 basis points above where they were in 2014. Consequently, earnings skyrocketed.
Best Buy is competing against Amazon more effectively than most hard-line retailers but the underlying question will be how important its brick and mortar locations are as online sales continue to grow.
Positives:
- Public Company, Credit Rated
- NNN lease eliminates landlord responsibilities
- Typically Long term leases with increases
Negatives:
- Competitive Industry Sector
- Susceptible to economic trends and pressures
- Large spaces make it more challenging to re-tenant
Market Snapshots:
On Market Ranges:
# of Properties in set: 6
Price: $6,278,310 - $7,628,480Average: $6,750,866
PPSF: $170 - $210Average: $199
Year Built: 2000 - 2007Average: 2004
CAP Rate Range: 6.34% - 8.26%Average: 7.12%
Size range: 20,004 sq ft - 46,432 sq ft Average: 33,563 sq ft
Last 12 Month Range:
# of Properties in set: 9
Price: $5,334,730 - $6,858,940Average: $6,350,867
PPSF: $144 - $163Average: $155
Year Built: 1994 - 2007Average: 2001
CAP Rate Range: 7.18% - 8.82%Average: 7.81%
Size range: 20,045 sq ft - 71,545 sq ft Average: 41,905 sq ft
Best Buy Company Profile
Headquarters Information
Richfield, Minnesota
Founded in 1983
Company type: Public
Stock Ticker: BBY
Sector: Electronics Store
Industry: Retail
# of Employees: 125,000
Best Buy Stock Keys
| Title | 2017 | 2016 |
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