Company Snapshot: Best Buy Co. Inc. – Still At a Precipice?
7601 Penn Ave S
Richfield, MN 55423-3683
Total Annual Sales:
Hubert Joly: President, CEO
Sharon McCollam: Executive VP; Chief Administrative Officer, CFO
After too many quarters of troublesome financials, Best Buy recently reported somewhat of a mixed bag to finish its most recent fiscal year. While annual revenues were down just slightly from the previous year’s $50.7 billion, despite a 53rd week being included into the most recent total, fourth quarter same store sales increased at just under 1% and profits were stronger than expected, an all-important Wall Street note.
It seems hard to believe that it is less than a year since homegrown CEO Brain Dunn was relieved of his duties following a company investigation which revealed an inappropriate relationship with a female employee. Company founder Richard M. Schulze followed Dunn’s exit, leaving the company after an investigation found that he knew of Dunn’s relationship and behavior but did not alert the company’s audit committee.
For some time prior to Dunn’s departure Best Buy had been indicating troublesome financials while experiencing pain from competition from several areas. Most significantly this came from the increasing growth of the Internet led by the juggernaut that is Amazon, the strength of consumer electronics regional chains and independents and big box discounters.
With new management in place led by Hubert Joly, Best Buy has been extremely vocal and proactive in addressing its challenges. Its long consumer detested return policy, featuring cumbersome “restocking fees” was dropped. Price matching, which was long limited to stores in very close proximity to the Best Buy location determining the match, now includes the Internet. Joly’s administration welcomes ‘showrooming’.
Recently it was announced that the deadline by which founder Richard Schulze could make a much anticipated offer to buy the company and take it private had expired. This is now one less headache removed from the corporate plate.
Can Best Buy’s new management truly turn things around? Time will tell. Considering all that has happened to corporate management during the past eleven months, we should have a fairly good gage on the strength of the company’s future in the relatively near term.
Update: Best Buy has now officially announced that Richard Schulze is returning to the company as its Chairman Emeritus. Schulze, who is Best Buy’s largest shareholder, is also nominating two former Best Buy executives to join him on the board of directors, former CEO Brad Anderson and former COO Al Lenzmeier.
The Joly administration has noted Schulze’s extraordinary popularity with company employees and his enthusiasm for Best Buy’s future, even after he had been deposed last year. It is anticipated that the ‘old guard’ can bring back some of the magic it had provided in growing a once single-unit audio specialty store into a national consumer electronics power.
The question now becomes, can the old guard work with the new and if so how well and to what end?