Best Buy Sells Five Star to Chinese Investing Firm

Best Buy Sells Five Star to Chinese Investing Firm
By The original uploader was KUsam at English Wikipedia [Public domain], via Wikimedia Commons

Best Buy Co Inc (NYSE:BBY) announced today that it has entering into an agreement with Jiayuan Group to sell their Five Star business.  Jiayuan Group is a real estate-focused investment group based in China.  Under the new Five Star business, the Jiayuan Group plans to grow the business with current Five Star Chief Operations Officer Yiqing Pan, who will be taking over the chief executive role when the deal is completed.

Best Buy Co Inc (NYSE:BBY) CEO Hubert Joly has praised the deal as successful and tells Best Buy investors that the company now has more resources and time to focus on its North American business and other private labels such as Dynex, Insignia, Modal, Platinum, and Rocketfish, which are operated in China.

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Five Star deal to have limited impact on Best Buy’s results

Best Buy Co Inc (NYSE:BBY) originally bought a majority stake in Five Star back in 2006 and the company now has 184 stores in China.  While the deal is set to close in fiscal 2016, analysts believe that the deal with have a limited impact on Best Buy results and operations.  Best Buy is still plenty at work with its own turnaround and recovery story, after showing signs of cracking, decay, and possible bankruptcy just a few years ago.

Since founder Hubert Joly has come back into the chief executive role, the company has been able to regain influence and customer respect.  Best Buy is beginning to be competitive once again with other major big box and online retailers, such as Wal-Mart Stores, Inc. (NYSE:WMT) and, Inc. (NASDAQ:AMZN).  While Best Buy was struggling with a setback on Black Friday with its online store out of commission for a lengthy period but, the company seem to have regained its footing and still capitalized well on its in-store sales and promotions.  It is too early to tell yet exactly, how good or bad the Black Friday-Cyber Monday deal period was for retailers, but preliminary reports are overall not very encouraging.

Best Buy remains one of the top destinations for holiday shopping

While retail sales may have stalled year over year, Best Buy Co Inc (NYSE:BBY) still remains one of the top destinations for holiday shopping needs in electronics.  Overall, with this move to get rid of its Five Star stake and move out of China for business, I think it makes sense right now.  The Chinese economy is pretty lackluster right now and Best Buy has already gone all-in on its North American revival.  So far, the work is bearing fruit and Hubert Joly seems to have starved off talks of Best Buy shutting down and becoming irrelevant, for now.  I certainly will be eagerly waiting for results from the holiday season from a general standpoint and from Best Buy’s standpoint.  I think Best Buy does better overall then other retailers who may be struggling right now.

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