After researching the performance of Best Buy Co., Inc. (NYSE:BBY) last week I found myself wondering how efficiently Best Buy is employing its store space. Also, I compared the data with Best Buy's competitors such as Wal-Mart (NYSE:WMT), RadioShack (NYSE:RSH) and Conn's (NASDAQ:CONN). So first of all I will look into individual usage of space of each the companies and then I will conclude with the comparison between them.
In fiscal year 2013 Best Buy operated 1990 stores with the total space of 55,785,000-square feet. The average space for a Best Buy store was 28,032-square feet. In 2013 Best Buy's total revenue was equal to $45 billion. The average revenue per square foot was equal to $808.
In the picture above you can see revenue per square foot measured in dollars in the last five fiscal years. At this moment, the revenue per sq foot is at the lowest point. The most disturbing fact is that the revenue per square foot has suffered so sharp a decrease during fiscal year 2013.
In 2010, Best Buy's total square footage was 54,377,000 comparing to 55,785,000 in 2013, thus meaning that Best Buy has been opening more stores but has not been able to keep up the pace on the revenue side. If Best Buy could boost revenue per square foot this year to $906 as it was in 2010, the revenue could amount to approximately $50.5 billion.
(All data provided above has been taken from Best Buy's Annual Reports available at Best Buy's official website.)
At December 31, 2012, Radioshack operated 7200 retail locations with the total space of 10,829,000-square feet. The average space for Radioshack retail location was 1,504 square feet. In 2012, Radioshack's total revenue was equal to $4 billion. The average revenue per square foot was equal to $393.
Radioshack increased it's revenue per square foot from $362 in 2008 to $393 in 2012. Radioshack had a slight decrease in revenue per square foot in 2012 comparing to 2011. Although the company has managed to increase its revenue per square foot, its overall performance has not been doing so well. In 2012, Radioshack suffered losses of $139.4 million and has reduced dividends comparing to 2011 from $0.50 to $0.25.
(All data provided above has been taken from Radioshack's Annual Reports available at Radioshack's official website)
As of January 31, 2013, Conn's operated 68 retail stores with the total space of 3,224,238-square feet. The average space for Conn's retail store was 47,415-square feet. In 2012, Conn's total revenue was equal to $649.5 million. The average revenue per square foot was equal to $201.
Conn's revenue per square foot has been fluctuating around $200 during last four years. As it can be seen in the picture above, Conn's revenue per square foot in 2009 was considerably higher, more than almost 15% higher than in 2013. Altogether 2013 for Conn's has been a really good year as the company managed to break the series of losses in 2011 and 2012 and returned to profit in 2013.
(All data provided above has been taken from Conn's Annual Reports available at Conn's official website)
In fiscal year 2013, Wal-Mart operated more than 10,700 stores with the total space of 1,076,900,825-square feet. The average space for Wal-Mart's store was 100,644-square feet. In 2013, Wal-Mart's total revenue was equal to $469 billion. The average revenue per square foot was equal to $435.
Right after 2009 Wal-Mart suffered a decrease in revenue per square foot. Although the company regained the same level of revenue per square foot, it is still $1 lower than in 2009. If you think that $1 is not much, then you're mistaken. As written before, Wal-Mart has more than 1 billion square feet of store space and thus an increase of $1 per square foot means more than $1 billion increase in revenue.
(All data provided above has been taken from Wal-Mart's Annual Reports available at Wal-Mart's official website)
Revenue per square foot in last fiscal year:
As it can be seen in the table above, Best Buy employs the store's footage most efficiently. Of course, each of these companies has different specialization and scope of operations, but it's still worth it to know how efficiently they are employing their space.
As I came to this analysis from the point of Best Buy analysis, this comparison has made one more argument supporting my analysis in the previously mentioned article. The bad thing is that Best Buy's revenue per square foot has decreased considerably comparing to 2010 and from this point of view the company should be looked at with caution.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.