Bestbuy Electronics

Brief History Best Buy

The company started in Minnesota in 1966. Richard M. Schulze is "the brain child and chairman" (Best Buy Co., Inc. 1). The now lucrative electronic store bean as a concept called Sound of Music. The concept began in St. Paul and was focused on home and car audio. The first year they grossed $173,000. Then Schulze realizing the market for fifteen to eighteen-year-olds with limited funds would not take the company very far. So in turn he began to incorporate VCR's and appliances. The sales quickly sky rocketed. In 1982 revenues climbed to an astonishing $9.3 million dollars. In 1984 the concept begin to integrate the superstore idea into their concept. In 1987 the sales had spiraled to an astonishing $239 million, and Best Buy had earned a spot on the New York Stock Exchange (Best Buy Co., Inc 2). In June of 2000 Best Buy launched the companies website which provided an outlet for customer convenience and a great profit. In 2004 the company opened the first concept in Hawaii and ten branches in Canada. Overall revenues reached an astounding $25 billion and a net income of $705 million dollars. "Through these initiatives, Best Buy hoped to stay ahead of its many rivals," (Best Buy Co., Inc. 9) such as Circuit City.

Brief History Circuit City

Mr. Bryan A. Parson -2- April 19, 2006

Samuel S. Wurtzel founded Circuit City. In 1949 on vacation Wurtzel learned from a barber that the first "commercial television station in the South would shortly go on the air in Richmond" (Circuit City Stores, Inc. 1). Seeing a great opportunity he opened a store selling television sets. Wurtzel opened the concept of Wards, an acronym for the names in his family. Soon the company branched out to four stores in the Richmond area integrating home appliances to its stock. In 1961 Wards offered stock to the public through a Baltimore Stockbroker selling 111,000 shares for $5.375(Circuit City Stores, Inc. 1). Through the late 1960's and 1970's Wards bought many concepts in the local area, and branched out their merchandise and clientele. They purchased a number of department stores in the Richmond area and begin selling furniture and automotive supplies. In the years of 1977 to 1979 Wurtzel closed many of the small appliances stores and shifted focus to a superstore concept. The concept was deemed Circuit City. By 1982 Circuit City had about 100 branches across the United States. At the end of 1983 the sales had spiraled to an astounding $246 million. In 1984 the company had earned its spot on the New York Stock Exchange (Circuit City Stores, Inc. 4). In 1993 after a grueling price war with Best Buy, the company decided to open a new concept. The company opened CarMax. The concept was a used car lot with quality behind it. The lots would hold 500 to 1000 cars with less than 70,000 miles, and also they would put them through a one hundred and ten-point inspection. The side company grossed an estimated $55 million after being opened only one year. The late nineties Circuit City struggled with their competition of Best Buy, and was passed up in sales in 1996. Throughout the last decade the company has focused on growth and adapting their concept to more convenient shopping experience for the customer. In 1999 Circuit City followed suit and jumped on the Internet Highway. The company launched their website in order to get some of the market sales for online purchases.

The report discusses some brief statistics over the companies, accompanied by data. Also the report highlights

Mr. Bryan A. Parson -3- April 19, 2006

Criteria for investment

1. Brief Statistical Overview of Companies

2. Past challenges which the companies have endured.

3. Specific competitive advantages held by each rival

Recommendations for investment

 Invest in Best Buy Inc.

 Monitor growth of stocks and profits for one year

Brief Statistical Overview of Companies

Both companies are leading retailers in consumer electronics. I have summarized the highlights of the companies' statistics in Table 1.

Table 1

Statistical Overview of Companies

Best Buy Inc. Circuit City Stores Inc.

Number of Stores 668 612

Number of Employees 109,000 42,425

Total Revenue $27,433,000,000 $10,472,364,000

Net Income $984,000,000 $61,658,000

Number of Shareholders 2,672 6,612

Stock Prices $54.15 $11.80

Mr. Bryan A. Parson -4- April 19,2006

(Mergent online database, April 18, 2006.)

As you can see from Table 1 Best Buy Inc. is leading in the overall profit from retail of consumer electronics. Best buy owns more store locations, fifty four more than Circuit City to be exact. Best Buy Inc. initiative to spread their concept across the United States and other countries such as Canada. Circuit City has branches in Canada also, it is trying to rapidly catch up to the booming business that Best Buy Inc. has displayed.

The net income totals of the Best Buy is crushing to Circuit City Stores Inc. Best buy Inc. almost doubled their net income eight times!

Another indicator of strength of the company's statistics was the number of people employed by each enterprise. Best Buy doubled its number of employees, which shows their dedication to customer service. We all know that customer service keeps bring satisfied customers back to spend more money.

Finally and most importantly