Retailer Best Buy Soars in Wake of Expansion

Call it the comeback kid. Only a year ago, electronics retailer Best Buy Company was on the brink of disaster. Reeling from rapid expansion---34 new stores in two years---and suffering from an industry-wide sales slump, the retailer was said to be close to defaulting on some large-scale loans. Customers were being offered no-interest long-term credit as an inducement to buy anything on the sales floor.

The picture has brightened considerably since then. Best Buy has streamlined its product lines, begun emphasizing aftermarket warranties, and has benefited from a general rebound in the consumer electronics market. A follow-up to its March 4 preliminary report said fourth-quarter sales were up 21% ($2.85 billion) over the same period a year earlier. It also reported a 17% increase in same-store sales.

The company's $70 5/16-per-share (as of April 2) stock (NYSE: BBY) has risen 50% in the last month. A year ago it was trading at $10/share. When this year's 25-store expansion is completed, Best Buy will have over 300 stores in North America. The mass-market retailer racked up $7 billion in sales last year.