With over 600 stores in the United States and more than 100,000 employees, Best Buy
has become one of the largest retailers of consumer electronics, major appliances and entertainment

software in the nation. In addition to opening up 70 new stores this year, Best Buy has expanded

both domestically and internationally through the acquisition of Magnolia Audio Video, a retailer of

consumer electronics and home office equipment, and Geek Squad, which provides computer

support to customers. Best Buy also operates 19 Best Buy stores in Canada along with over 100

Future Shops, which specializes in the same type of products.

Best Buy is currently ranked first in its industry with a market cap of over $17 billion. Its two main

competitors, Radioshack and Circuit City, lag behind with market caps of $4.5 billion and $3.0

billion, respectively. Its revenue earnings for fiscal year 2003 was around $24.5 billion with net

income of about $705 million. Total current assets at the end of 2003 came out to $8.7 billion and

shareholders' equity roughly equaled $3.4 billion. As of February 2004, Best Buy has had revenue

growth of about 17.2% which was not unexpected as they have regularly outperformed analyst

expectations and their own estimates over the past couple of years.

Best Buy recently launched a customer loyalty program, the "Reward Zone," which has helped to

boost sales. As a result, Best Buy has begun to focus more on customer service and employee

training in order to maintain their revenue growth over the upcoming years. Their "customer

centricity" model places more emphasis on satisfying customer demands. They are also in the

process of opening up 70 new stores that will cater to specific customer segments and their

unmet needs. Their other strategic initiatives include controlling operating expenses along with

better management of funds, expanding their at home services, and providing new products and

services as soon as they are available.

In addition to remodeling its sales strategy and focus, Best Buy has also signed agreements with

companies such as Accenture and Napster to better serve their customers and to increase

revenues. Accenture provides consulting and outsourcing services which will help Best Buy

become more efficient in meeting consumer needs. Napster has become Best Buy's leading

provider of online and digital music and the only brand that is available through Bestbuy.com.

Best Buy has had very positive results in the past couple of years leading to numerous awards

that have recognized them as the one of the best retailers in their industry. In January of 2004,

Best Buy was named Company of the Year and the 4th most generous company in America by

Forbes Magazine. They were ranked number one on Stores' Top 100 Specialty Retailers in August

2003 and they held the seventh position on Business Week's rankings of the best performing

companies on the S&P 500.

In order to maintain positive growth earnings, Best Buy needs to concentrate on reducing its

operating costs.

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