Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  Equities  >  Nyse  >  Best Buy Co Inc    BBY

Delayed Quote. Delayed  - 02/24 08:20:23 pm
45.51 USD   +2.71%
03:15pBEST BUY CO INC : annual earnings release
02/23 BEST BUY : Police blotter
02/23 BEST BUY : Zephyrs Typhoon Under-Cabinet, Tempest II, and Roma Islan..
SummaryQuotesChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsSector newsTweets 

Best Buy Increases Loyalty Rewards in Move to Spur Sales

share with twitter share with LinkedIn share with facebook
share via e-mail
0
04/03/2013 | 06:48pm CET

--Reward Zone credit-card holders to get 5% back in towards future purchases, up from 4%

--Move is latest in CEO turnaround plan to reverse sales slide

--Follows other attempts to throw off perception of Best Buy as showrooming victim

By Joan E. Solsman

Best Buy Co. (>> Best Buy Co., Inc.) is increasing how much it rewards customers who use its loyalty-program credit cards by 25%, part of its chief executive's plan to turn around the struggling retailer and increase purchases of higher-priced items.

Starting Sunday, Best Buy will give 5% back in rewards points to customers paying with a Reward Zone program credit card or MasterCard, up from 4%.

The increase puts Best Buy's rewards program at the high end among retailers, indicating the pressure it's under to spur sales. The company hopes the higher points, good for future purchases, will prompt purchases of bigger-ticket products, which it will need to offset the potential dent to profit from higher rewards.

The move is the latest attempt by Chief Executive Hubert Joly to revitalize the retailer, where sales at longstanding stores have stagnated for the past four years as consumers increasingly go online to make purchases, especially technology products. Mr. Joly has said enhancing Reward Zone will play a part in accelerating online growth, one of Best Buy's top turnaround priorities.

Since becoming chief executive in September, Mr. Joly has been aggressively trying to increase sales. During the holidays, Best Buy instituted a price-matching program that gave the same price to customers who found the same item elsewhere online for less. The strategy helped Best Buy post a rare quarterly increase in U.S. same-store sales without hurting the company's profitability. The company made the policy permanent in February.

B. Riley analyst Scott Tilghman said Best Buy and other operators of voucher-based rewards have found that every $1 in certificate face value tends to reap $2 in purchasing. And, of course, a fair amount of points go unused.

"The cost is relatively minimal because more than likely they will make it up on increased sell through," he said.

An increase to 5% from 4% may seem like "small potatoes," said loyalty program expert Rick Ferguson, vice president at Aimia, a Montreal loyalty marketing and analytics provider. But the industry generally regards 5% "as the 'sweet spot' for motivating consumer incremental spend and behavior change," he said.

Under the rewards arrangement, members also will have the option to choose 0% financing instead of points.

Mark Williams, president of Best Buy financial services, said the 5% change makes the reward competitive with the high-end of what is offered by competitors.

Target Corp. (>> Target Corporation), for example, offers a 5% automatic discount on purchases made with its "REDcards." The difference, though, is Target puts the cash back in customers' pockets, while Best Buy's reward gives credit toward more spending at the store.

Mr. Williams said the company has found its most loyal customers prefer accumulating the points for aspirational, high-price items.

Michael Pachter, a Wedbush Securities analyst who is bearish on Best Buy, said the "very high" 5% level would grab loyal customers' attention. However, with Best Buy's slim margins, giving away an additional percentage point of sales is significant.

Nontheless, the move should slow market share loss to Internet retailers like Amazon.com Inc. (>> Amazon.com, Inc.), where lower prices and taxes can stoke shoppers to use Best Buy like a showroom to browse products without buying.

Best Buy launched the Reward Zone program nearly a decade ago. At the time, the program was considered ahead of the curve in terms of mining data to gear selling strategies to shopper types and influence store design, but those advantages eased around the time the recession hit.

This is the first major change to Reward Zone credit cards since 2010, when the store increased the reward to the current 4% from 2%.

Write to Joan E. Solsman at joan.solsman@dowjones.com.

Stocks mentioned in the article : Best Buy Co., Inc., Target Corporation, Amazon.com, Inc.
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on BEST BUY CO INC
03:15pBEST BUY CO INC : annual earnings release
05:59a BEST BUY : NYNE Xtra-Rugged Rock and Rebel Speakers Now Available at Best Buy St..
02/23 BEST BUY : Police blotter
02/23 BEST BUY : Zephyrs Typhoon Under-Cabinet, Tempest II, and Roma Island Receive Be..
02/22 BEST BUY : tops St. Jude Children's Research Hospital holiday donor list with $1..
02/22 BEST BUY : Zephyr's Typhoon Under-Cabinet, Tempest II, and Roma Island Receive B..
02/22 BEST BUY : Finishes as Top Fundraising Partner for St. Jude Children’s Res..
02/21 BEST BUY : Fight Against Flu Includes Keeping Your Phone Clean
02/18 With stocks at highs, investors eye consumer results
02/16DJRetail CEOs Meet With Trump Over Border Tax Concerns -- Update
More news
Sector news : Computer & Electronics Retailers - NEC
02/20DJSun Art Retail in Initial Talks With Suning for Potential Cooperation
02/15 On the frontline of China's spending revolution - small loans, big data
2016DJSUNING COMMERCE : China Nets Italy's AC Milan Soccer Club
2016 SUNING COMMERCE : China's Suning leads race for soccer "super agent" Stellar - s..
2015 Alibaba gets more bang for its buck as revenue growth tops forecasts
More sector news : Computer & Electronics Retailers - NEC
News from SeekingAlpha
09:46a Best Buy perks up after report of hhgregg bankruptcy
07:19a Don't Buy Kellogg - Cramer's Lightning Round (2/23/17)
02/20 One 20% Dividend Increase Expected Among 8 Announcements In 2nd Half Of Febru..
02/18 Top 10 Net Payout Yields For February 2017
02/15 Heavyweight retail CEOs to meet with POTUS
Advertisement
Financials ($)
Sales 2017 39 553 M
EBIT 2017 1 697 M
Net income 2017 1 142 M
Finance 2017 908 M
Yield 2017 3,16%
P/E ratio 2017 12,50
P/E ratio 2018 12,73
EV / Sales 2017 0,33x
EV / Sales 2018 0,32x
Capitalization 13 906 M
More Financials
Chart BEST BUY CO INC
Duration : Period :
Best Buy Co Inc Technical Analysis Chart | BBY | US0865161014 | 4-Traders
Full-screen chart
Technical analysis trends BEST BUY CO INC
Short TermMid-TermLong Term
TrendsNeutralNeutralBullish
Technical analysis
Income Statement Evolution
More Financials
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 27
Average target price 45,0 $
Spread / Average Target 1,5%
Consensus details
EPS Revisions
More Estimates Revisions
Managers
NameTitle
George E. Sherman Chief Executive Officer
Hubert Joly Chairman & President
Corie Barry Chief Financial Officer
Kathy J. Higgins Victor Independent Director
Gérard R. Vittecoq Independent Director
More about the company
Sector and Competitors
1st jan.Capitalization (M$)
BEST BUY CO INC7.15%13 906
DIXONS CARPHONE PLC-15.57%4 328
GOME ELECTRICAL APPLIA..20.21%3 117
TECH DATA CORP3.67%3 086
JB HI-FI LIMITED-2.53%2 355
JIANGSU HONGTU HIGH TE..9.33%2 222
More Results