Goldman Sachs Color On BBY Restructuring

Best Buy Co., Inc. (NYSE: BBY) announced a series of changes to store opening plans, as well as other minor restructuring moves, that will result in a more streamlined growth strategy, and cost savings amounting to $0.07 per share in 2011 and $0.10-$0.11 per share in 2012, as well as charges in the current year, Goldman Sachs reports.

“The firm also reiterated 2010 guidance of $3.20-$3.40, excluding charges,” Goldman Sachs writes. “Specifically, BBY will limit US BBY store growth to 6-8 units in 2011, vs. around 36 in 2010 and our forecast of 32; focus US store growth on BBY mobile stores (150 in 2011); close its nine BBY China stores, focusing growth on its Five Star format; exit Turkey; and, close some domestic DCs.”

Goldman Sachs said that it expects a favorable reaction to this announcement as the company is prioritizing financial security and visible returns over optionality and speculation at a time when it needs its capital and management resources focused on challenges in its domestic businesses.

“These moves do not provide solutions to the daunting challenges for the domestic operation that drive BBY earnings, but they enable the marshalling of resources in that direction,” Goldman Sachs writes. “Our estimates and target are under review; we will return with any revisions and further commentary after additional analysis.”

Best Buy Co. currently trades at $33.49.