Best Buy Analyst Says Progressive Leasing Partnership Could Boost Sales

In late February, Best Buy Co Inc BBY announced plans for a lease-to-own partnership with Progressive Leasing, a subsidiary of Aaron's, Inc. AAN.

The partnership could potentially add 2-5 percent to Best Buy’s sales over the next two to three years, according to KeyBanc Capital Markets.

The Analyst

KeyBanc Capital Markets’ Bradley Thomas maintains a Sector Weight rating on Best Buy.

The Thesis

The lease-to-own offer will be available at around two-thirds of Best Buy’s stores, and nearly all products in those stores will be eligible, Thomas said in a Tuesday note. 

The consumer electronics retailer began with a pilot that was found to drive improved transactions and inspired more confidence in the Best Buy credit card, the analyst said. The Progressive Leasing partnership holds no credit risk for Best Buy, as the company will be paid full retail prices by Progressive, he said. 

Progressive’s success at other retailers suggests the plan could boost Best Buy’s sales by 2-5 percent over the next two to three years, Thomas said.

“We estimate Progressive will contribute 50-100 bps this year to BBY comps, but see this as having upside potential depending on the pace of the rollout and success of in-store execution.”

Price Action

Best Buy shares were trading slightly higher at $68.39 at the time of publication Thursday. 

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