By December 2012, Best Buy stock had fallen below $12 a share, the CEO who preceded Hubert Joly had just been pushed out over a personnel scandal, and the company's own founder was maneuvering to buy the whole thing out from under the board. Customers, meanwhile, kept walking through the doors in droves. They just weren't buying much once they got there.

Best Buy's total shareholder return from the end of fiscal 2013 through Hubert Joly's seven years as CEO

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Best Buy's problem had a name by 2012: showrooming. Shoppers would walk in, spend twenty minutes with a blue-shirted associate comparing televisions, then pull out a phone and order the same set from Amazon, often for less and without paying sales tax at all. That September, Hubert Joly took over as CEO, spending his first week working an actual store floor. And the issue became clear for him: the company's problems were self-inflicted.

In the quarter Joly arrived, domestic comparable sales fell 4.3% and the company posted a GAAP net loss for the period. Once the books were restated, fiscal 2012 showed an $1.3 billion net loss, and fiscal 2013 narrowed that to $443 million only after absorbing $822 million in goodwill write-downs. These numbers don’t represent a business firing on all cylinders…

Best Buy shares sank to $11.29 in late December 2012, and Wall Street had all but given up. Richard Schulze, the company's founder, spent months trying to line up financing for a $24-to-$26-a-share buyout that would have taken the company private. But he couldn’t secure the debt, and the bid collapsed in February. 

The deeper issue was structural. Smartphones made it easier for customers to quickly check competitors online. A shopper no longer needed a salesperson to know a product's specs or the most competitive price. Big-box retailers still carried the cost structure of that older world: deep inventory, large-format leases, store payroll. Amazon carried almost none of it. Best Buy's own floor plans were still devoting real estate to CDs and DVDs years after digital had gutted both categories, a mismatch nobody at the top had bothered to fix.

Joly had eight weeks between his start date and his first meeting with Wall Street, and he used them to co-write a plan with employees rather than hand one down from headquarters. He unveiled it in New York on November 13, 2012, under the name Renew Blue. The first move was blunt: take price off the table entirely. If customers were leaving to save a few dollars online, Best Buy would simply match whatever they found, including the roughly 8% edge some competitors got from uncollected sales tax at the time.

That promise became permanent when Best Buy's new Low Price Guarantee began matching 19 online retailers (including Amazon, Walmart, and Apple), on almost every in-stock item in the store. The company compensated for those lower prices by reducing its return window from 30 days to 15. This trade went almost unnoticed among shoppers, but played a role in protecting margins. With that move, Best Buy’s showrooming stopped being free money for Amazon.

Joly and new CFO Sharon McCollam went after cost with equal discipline. Renew Blue's savings target started at $725 million and was raised to $1 billion within a year, funded mostly by supply chain fixes rather than store closures. One example became a favorite of Joly's in interviews afterward: reworking how Best Buy packaged and handled its increasingly large, thin televisions cut breakage enough to save hundreds of millions of dollars a year on its own. Headcount reductions came last, only after the non-salary options were exhausted.

In December 2012, Samsung's CEO visited Best Buy and struck a handshake deal for dedicated retail space inside its stores. Within months, roughly 1,400 Samsung Experience Shops, staffed and largely funded by Samsung's own consultants, were rolling out across the chain. Microsoft followed that June with Windows Stores in 600 U.S. and Canadian locations, department-sized sections stocked with 1,200 Microsoft-trained staff Best Buy didn't have to hire. Sony, LG, Google, and eventually Amazon itself signed similar deals. Best Buy had turned its most expensive liability (square footage) into inventory vendors were desperate to rent.

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The first proof came fast. In the fourth quarter of fiscal 2013, just months after Renew Blue launched, domestic comparable sales rose 0.9%. It marked the company's first quarterly gain in years, while online revenue climbed 11%.

Momentum compounded from there. In 2017, Best Buy grew both its domestic comparable sales and its operating income for the third year in a row, closing the year with $39.4 billion in enterprise revenue. GAAP operating income rate expanded from 3.5% to 4.7%, and diluted earnings per share jumped 63%, from $2.30 to $3.74. In September 2017, Joly stood in front of investors and formally declared the turnaround finished, unveiling a growth-phase successor called Best Buy 2020: Building the New Blue, targeting $43 billion in enterprise revenue within four years.

That growth was built on discipline. Over the five years, Best Buy amassed $1.4 billion in cumulative cost savings, with most of it coming out of supply chains and packaging rather than payroll. That combination, sales rising on vendor-subsidized real estate while costs fell on operational fixes, is what let Best Buy match Amazon on price without cutting itself apart in the process.

By the time Joly handed the CEO torch to Corie Barry in June 2019, Best Buy Best Buy's stock had roughly quadrupled. Shares that bottomed at $11.29 in December 2012 were trading near $73 the day his succession was announced. Best Buy's own accounting of the era puts it in blunt terms: a 335% total shareholder return since the end of fiscal 2013, against 104% for the S&P 500 over the same stretch. Few retail turnarounds of the decade compressed that much value creation into such a short window.

The playbook didn't stay magic forever. In the years after Joly departed, Best Buy's growth flattened and its stock badly lagged the market again, a reminder that Renew Blue was a response to a specific moment rather than a permanent formula. But the core insight held up. A retailer squeezed between a low-cost online giant and its own bloated cost structure doesn't need to out-discount the giant. It needs to find something the giant can't easily sell, which in Best Buy's case was floor space the rest of the tech industry was willing to pay to occupy.

Key takeaways to consider…

$11.29 - Best Buy share price low in late 2012 

$1.3 billion - Net loss in fiscal 2012 

19 - Online retailers included in Best Buy's price-match program 

$1 billion - Annualized cost savings achieved under Renew Blue 

335% - Total shareholder return during Hubert Joly's tenure 

5 - Consecutive years of domestic comparable sales growth