Best Buy Eyes $50B in Revenue by FY25
Best Buy Co. Inc. is raising the stakes.
At an investor meeting at the New York Stock Exchange on Wednesday, the company’s execs laid out plans to generate $50 billion annually by fiscal year 2025. For comparison, Best Buy is eyeing somewhere in the range of $43 billion for FY2020.
The electronics retailer also hopes to cut costs by about $1 billion by FY25.
Matt Bilunas, who took over as Best Buy’s chief financial officer earlier this summer, said investments in technology will play a key role in achieving those savings.
“We will be investing in technology to drive business outcomes,” he told investors.
Best Buy’s leaders also emphasized the importance of establishing human connections with tech. The phrase “tech and touch” was thrown around quite a bit over the course of the more-than-two-hour investor update. Asheesh Saksena, president of Best Buy’s health division, said the phrase defines “what we are” as a company.
Saksena also made the case for chasing more business in the health care space. Currently, the company provides health monitoring services to about 1 million seniors. Over the next five years, Best Buy hopes to bring that number to 5 million, Saksena said.
“Best Buy seeks to address everyday needs of our customers with the help of technology, and health is one of those eternal, everlasting human needs,” said Saksena, noting that the market for health tech has grown significantly within recent years. “Technology innovation in health tech is on a tear.”
Analysts appear optimistic about Best Buy’s prospects in the health care space. Earlier this week, Morgan Stanley released a report that said Best Buy could generate anywhere between $11 billion and $46 billion in cumulative revenue from its health business.
Even as Best Buy pursues other business opportunities, there are no plans to abandon brick-and-mortar retail. Best Buy still operates more than 1,000 stores across the country, and that apparently won’t be changing any time soon.
“We fundamentally believe our stores are one of our greatest assets,” said CEO Corie Barry, noting that very few customers “shop in only one channel.”
Best Buy’s leaders did discuss the prospect of remodeling existing stores. But Barry said to think of the remodels as “an evolution, not a revolution.”
To be sure, Best Buy will need to weather a number of challenges to bring its $50 billion revenue plan to fruition. There’s the ever-looming issue of tariffs on Chinese goods, which have caused headaches for many businesses. (Consider Blaine-based Arrowhead Engineered Products Inc., which has filed more than 10,000 requests for exemptions from the tariffs, according to The Wall Street Journal.)
But Best Buy CFO Bilunas seemed undeterred at Wednesday’s meeting. He acknowledged that the tariffs will cause some “near-term volatility,” but he expects the situation to normalize over time.
“By this we mean they will either stay in place, and within a few years, everyone will evolve to a new environment,” he told investors. “Or, tariffs go away completely and cease to be a concern.”
Bilunas noted that more vendors continue to move out of China.