Best Buy’s fiscal year update hinted at the much-needed turnaround on which chief executive Hubert Joly set his sights when he joined.

Best Buy’s fiscal year update hinted at the much-needed turnaround on which chief executive Hubert Joly set his sights when he joined.

Operating income

$1.1bn

Revenue

$42.41bn

Comparable sales

0.8%

Store count

22

The ‘Renew Blue’ plan stated that heavy investments would bring Best Buy’s operations into the modern era. The early indications are fairly encouraging. Operating income for the year to February 1 improved from a loss of $119m (£72m) last year to a gain of $1.1bn (£660m). Revenue was $42.41bn (£25.6bn) compared with $39.83bn (£24bn) in fiscal 2013.

However, comparable sales fell 0.8% and the store count fell by 22 to 1,968. That suggests that on a comparable 12-month basis, the business experienced a slight decline in revenue.

Amid signs of stabilisation, Best Buy also announced a road map based on eight priorities for the next 24 months.

The first is merchandising. Best Buy outlined five objectives to create a compelling assortment. They include a drive to strengthen vendor relationships and expand its Pacific Kitchen & Home and Magnolia Design Centers.

It also wants to develop better-targeted, more relevant and personalised customer communications in support of category strategies and to improve customer service and experience both in-store and online.

Another focus is the supply chain. During 2013, Best Buy’s ship-from-store capability was rolled out. That allows for online orders to be fulfilled from a customer’s local outlet, leading to quicker and cheaper shipping.

Through the fourth quarter of 2014, $765m (£461m) in annual costs were eliminated under Renew Blue. This target has been stretched to $1bn (£600m) over the next two years and will be achieved by tackling returns/damages logistics efficiencies, procurement and continued rationalisation of the business.

Rounding off the strategic pillars is a rather anti-climactic call to strengthen “talent” within the business and a slightly vague “new field- and store-operating model”.

This to-do list has been compiled in pursuit of long-term non-GAAP targets of a 5% to 6% operating income rate and a 13% to 15% return on invested capital.

Many industry analysts are sceptical that these can be achieved in a market undergoing fundamental structural change.

Joly’s reputation as a man who sets seemingly impossible targets and yet somehow manages to achieve them is still on the line, but the early signs are promising.