Brian Sozzi of Belus Capital Speculates Major Changes Are Coming At Best Buy

In a note to clients, Brian Sozzi, CEO and chief equities strategist of Belus Capital Advisors released on Wednesday a research report on Best Buy (NYSE: BBY) titled “Could This Be One Development From Best Buy About To Surprise Everyone?”In the note, Sozzi explores Best Buy's Mobile store strategy such as its Samsung Experience shops. Sozzi notes that management has shied away from discussing the concept on its earnings call since November 2012, and for good reason.“In light of Best Buy signaling to the Street that another significant restructuring plan was in the works recently, and considering that Best Buy Mobile was opened aggressively under former CEO Brian Dunn, we have reason to believe there is a broader internal re-think into operating a good portion of these stores (as of the latest 10-Q, there were 415 Best Buy Mobile stores opened, up from 177 at the end of FY11 as presented in the recent 10-K,” Sozzi wrote in his research report.Sozzi offers several reasons to support his view that Best Buy is “re-thinking” the "store in a store" concept. Firstly, the size of a Best Buy Mobile store does not allow a Best Buy location to morph into a “distribution center”, a concept management has toyed with recently.Secondly, A Best Buy store is not large enough to satisfy consumer demand from various key vendors such as Google, Samsung, Apple, Microsoft and potentially Nike.Additionally, the company operating a Best Buy Mobile store is not a good model for the long term due to pressured margins on mobile devices.Finally, Sozzi said that the Best Buy Mobile store was a concept implemented under the old management team led by Brian Dunn who has since been relieved of his duties. A new management team should find it to be an “easier decision” to exit many locations where the concept is proving to not work.Belus Capital Advisors maintains a Sell rating with a $20 price target.