Best Buy to Repurchase Shares?


Why would Best Buy repurchase shares? Best Buy is exploring whether to repurchase its shares which I’m sure is an attempt to boost the price of its shares to appeal to the mom and pop investor. Best Buy has to project an image to reassure investors that it is a going concern, and although its stock price could be a representation of management decisions there may be another reason for the repurchase. Best Buy has experienced declining sales per square foot due to an increasing number of its products becoming digitized. Best Buy has more space in its stores than it necessarily needs because it no longer needs to stock cds, dvds, and software which is a result of the distribution moving to the internet. Best Buy has to adapt its stores to the changing retail environment and it will succeed by revamping its retail model to occupy smaller sites. The big box store will be phased out, and a reflection of this change will be realized in the company’s stock price. In order for Best Buy to make the sweeping revitalization of its brick and mortar stores it will require management to make difficult decisions which may be easier to make if they control a greater number of the outstanding shares.

http://on.wsj.com/kFFd15

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