Best Buy CEO declares turnaround phase over
MINNEAPOLIS — Four years after ushering in his “Renew Blue” strategy to resuscitate Best Buy, CEO Hubert Joly proclaimed Wednesday the retailer’s turnaround phase officially was over.
Joly acknowledged Best Buy still has plenty to do, especially after the company just reported a drop in holiday sales and a forecast for flat growth and profitability this year. Those results disappointed investors who sent the retailer’s share down 5 percent on Wednesday.
But he noted the retailer just finished its third straight year of comparable sales growth — albeit tepid growth of less than 1 percent per year — and has become profitable again even while matching prices with competitors such as Amazon.com.
“I don’t know about declaring victory, but this is meaningful improvement,” he told reporters. “Four years ago, it was about saving the company. We didn’t die: check.”
Under Joly’s leadership, the company has slashed more than $1 billion in costs. It has invited major vendors such as Samsung and Sony to set up mini-shops inside its stores. It has improved its digital capabilities, with online sales accounting for about 19 percent of its U.S. sales during the holidays.
Joly dubbed the next phase “Best Buy 2020: Building the New Blue.”
“It’s about shaping our future … moving from a turnaround mode to more of a strategic mode,” Joly said. “It’s still going to be a journey.”
The next chapter still will include finding ways to take out costs to fund new initiatives. It also will focus on finding more predictable revenue streams to help Best Buy rise above the ups and downs of the cyclical electronics markets.
In particular, it will focus on getting the most bang as it can out of its online business, expanding services such as its Geek Squad and in-home advisers pilot program and looking for growth in its Canadian and Mexican operations.
Neil Saunders, managing director of GlobalData Retail, agreed Best Buy has stabilized during the last several years but said it still seems to be in a “turnaround of sorts.”
“I don’t think they’re in the same phase they were some years ago when they were struggling and searching for a reason to exist,” he said. “They’ve definitely exited that more challenging phase, but there’s still more work to do.”