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The funny thing about Best Buy owning a chain called Future Shop is the widespread belief that Best Buy has little, if anything, to do with the future of shopping.

To develop that view, we have only needed to look at Amazon.com and its multi-year incursion into all sorts of retail segments, an effort that has left companies in books, music, office supplies and electronics gravely wounded. The idea of the inevitable triumph of Amazon surely helped drive Best Buy stock to its lows in late 2012, when Best Buy's awful results suggested its huge brick-and-mortar network, once such a compelling advantage, would be its end.

A funny thing has happened since, however: Under a new CEO, Best Buy has sharply cut back its real estate and improved its website and its in-store pricing. Despite a stumble in early 2014, the shares, at $38.22 Thursday, are roughly triple the levels of peak pessimism just over two years ago. Skeptics (including me) have been proven wrong, at least in the short term.

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Does that mean Best Buy shares are actually a buy? It's fair to question where this company will be a decade from now. But for an increasing number of Wall Street analysts, the word "future" is no longer a dirty one for Best Buy.

Last Saturday's news that Best Buy would close all its Future Shop stores, reopening roughly half under the Best Buy banner, put a slight dent in the 2015 story for the company. It's not so much the special charges – the company will incur somewhere between $200-million to $280-million (U.S.) over the next five years – as it is the reinvestment in Canada. The plan to spend $160-million on the re-branding and improvements to the Canadian website eats into free cash flow and leaves less room for stock buybacks, notes analyst Greg Melich of Evercore ISI, who is neutral on the shares.

Best Buy's mediocre Canadian results, however, required action, many analysts suggest. Scot Ciccarelli, who works for RBC Dominion Securities' U.S. arm, estimates Best Buy made just $25-million in earnings before interest and taxes on just under $4.4-billion in sales. "The simple fact is, the entire Canadian operation has been relatively unproductive," says Mr. Ciccarelli, who has an "outperform" rating and $42 target price.

The plan, he suggests, is for Best Buy to recapture about 25 per cent of the lost Future Shop sales and possibly double Canadian earnings thanks to the reduced cost structure.

Seth Sigman of Credit Suisse, who has an "outperform" rating and $45 target price, draws the conclusion that the commitment to reinvest in Canada means Best Buy management is more confident in the health of its U.S. business, which is the vast majority of the company's $40-billion in annual sales. More importantly, he says, it suggests Best Buy is now more willing to pay to get out of leases for unprofitable stores, "something we believe this management team had been reluctant to do in the past."

There are fewer problematic stores in the U.S., Mr. Sigman says, but there is plenty of geographic overlap: He estimates that 64 per cent of the company's 1,000-plus stores are within five miles of another, when the much-smaller Best Buy Mobile locations are included. When just the "superstore" locations are considered, 22 per cent overlap with another superstore within five miles. "Thus, we believe store rationalization in the U.S. reflects one of the most significant opportunities over time."

It's not to say this hasn't already occurred to Best Buy. Under CEO Hubert Joly, appointed in 2012, the company has cut $1-billion in annual operating expenses under its "Renew Blue" program and plans to find $400-million more in savings. The store count and square footage at its superstores has dropped by about 5 per cent in the last three years, with resources shifted to the Best Buy Mobile stores, which stock phone, tablets and accessories. Inside the superstores, Mr. Joly is pushing for more efficient use of the selling space, including store-within-a-store space for some of the company's key partners, like Samsung.

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Some of those cost savings have been returned to shareholders – the company said in early March it would buy back $1-billion worth of stock over the next three years and pay a one-time dividend of 51 cents per share from litigation proceeds. That's on top of a recent 21-per-cent increase to the regular dividend of 23 cents per quarter.

To Kate McShane at Citigroup Global Markets Inc., Best Buy's ability to generate free cash, then use it for buybacks, is one of several reasons she's made it a "top idea" in her retail coverage, with a target price of $45. Most bullishly, she says the "Internet threat [is] likely overstated," as Best Buy grew its U.S. online sales by 16.7 per cent in the fiscal year that just ended, to 10 per cent of overall revenue. "We expect the company to push the online penetration higher as it makes further website enhancements, develops more robust methods for targeted marketing, improves the supply chain, and delivery speed," she says.

It almost sounds like a future shop, if not The Future Shop. The long-term future for a physical retailer such as Best Buy remains uncertain. But the obituaries written for Best Buy in the last couple of years that suggested an imminent death may have been a bit too early.

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