The recent news release from Best Buy (December 15, 2009), of their improved Earnings per Share over last year further confirms the wisdom of not only focused expense management, but also of the advantages of focusing on non-core expenses.
Bob Willett, CEO of Best Buy International, noted that "[their] diligent focus on expense management this year" helped improve overall profitability. It was noted that Selling, General & Administrative (S,G&A) expenses decreased from 22.5% of revenue to 21.3% of revenue. This has a direct impact on the bottom line as well as on cash flow. Even with only a 5% decrease of non-production costs, the impact is both real and noticeable.
While the focus of any company should be on increasing sales, sound expense management practices are always essential. Non-core areas, although smaller than core areas, can nevertheless impact the bottom line. Ignoring non-core areas ultimately leads to inflated expenses and lower profits.
At least Best Buy has it worked out.
Thursday, December 17, 2009
Thursday, December 3, 2009
Will 2010 be a Better Year?
Yesterday, the United Nations came out with a positive forecast for the global economy for 2010. The primary drive will be from Asia. The U.S. is also expected to see modest economic growth.
Nevertheless, the U.N. cautioned the growth will be 'fragile' and could fail if stimulus spending stops and if the U.S. deficit and external debt continues to climb. Such a crisis could cause global instability.
No word yet on how continued stimulus spending will not lead to a (at least temporary) increase in both the U.S. deficit and external debt.
There is a lot of talk about a looming 'double dip recession' (also mentioned in the U.N. report). There is also a lot of talk about the likehood of 'modest growth' and a 'fragile economy'. I think it's more a case of both cautious optimism and having it both ways. If the economy grows, it was predicted. If it fails, it was mentioned as a realistic possibility.
On that note, I'm not going to be any different. I think 2010 will be better although how much of this is based upon wishful thinking I can't say. Suffice it to say that everyone appears to be in general agreement that we still have a long way to go.
What this means for businesses is simple: stay focused. Don't lose sight of sound cost management practices. Put them in place now (if you haven't already done so).
Nevertheless, the U.N. cautioned the growth will be 'fragile' and could fail if stimulus spending stops and if the U.S. deficit and external debt continues to climb. Such a crisis could cause global instability.
No word yet on how continued stimulus spending will not lead to a (at least temporary) increase in both the U.S. deficit and external debt.
There is a lot of talk about a looming 'double dip recession' (also mentioned in the U.N. report). There is also a lot of talk about the likehood of 'modest growth' and a 'fragile economy'. I think it's more a case of both cautious optimism and having it both ways. If the economy grows, it was predicted. If it fails, it was mentioned as a realistic possibility.
On that note, I'm not going to be any different. I think 2010 will be better although how much of this is based upon wishful thinking I can't say. Suffice it to say that everyone appears to be in general agreement that we still have a long way to go.
What this means for businesses is simple: stay focused. Don't lose sight of sound cost management practices. Put them in place now (if you haven't already done so).
Subscribe to:
Posts (Atom)