Best Buy's interim CEO said Thursday that the electronics seller is operating below its full potential but is committed to changing in fundamental ways.
Best Buy’s interim CEO said Thursday that the electronics seller is operating below its full potential but is committed to changing in fundamental ways.
Still, he and other executives offered few specifics at the company’s annual meeting, and shares slipped nearly 4 percent.
Best Buy is trying to combat the “showrooming” of its stores, as consumers test out products at its stores but go home and buy them cheaper online or at discounters. The company is also recovering from internal drama. Its CEO abruptly resigned in April during an investigation into his relationship with a female employee. Founder and Chairman Richard Schulze also resigned after the investigation deemed he knew about the relationship but did not disclose it.
In the wake of that, the annual shareholder meeting was relatively sedate and lasted about an hour.
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Executives, including interim CEO Mike Mikan, who has been that role for about two months, offered some hints on what the company is planning to do to improve, including expanding relationships with businesses, improving customer service and training rethink Best Buy’s store model. But few details were given – the company expects to have more details by the end of the summer.
Mikan said an April deal between its Geek Squad customer service division and the Association of American Retired Persons for tech support was one example of a business-to-business deal that Best Buy is trying to capture more of.
A similar deal is in the works with an undisclosed technology company, he said.
Mikan, who is in the running to become permanent CEO, made a splash during the company’s earnings call in May, after he had been in place for just two weeks, calling for change at the company and vowing there would be “no sacred cows” as they look at the business.
He repeated that line on Thursday, but also seemed to echo more of the company’s long-held tenets, such as the value of customer service in combatting online competitors.
“We have to invest in employees by giving them more training and better tools to maximize what they can offer for our customers,” he said. To that end, Best Buy plans to train 50,000 staffers at a training center at its headquarters between August and the holidays.
The company is also testing different store formats, including a revamped store format at the store near its headquarters in the Minneapolis suburb of Richfield, Minn.
There, the center of the store is a large “Solution Center” desk where customers can ask for help on tech problems. The appliance section is significantly bigger than in most other Best Buy stores. Store workers still wear Best Buy’s trademark blue shirts. But most of the signs were white, giving the store a lighter look, and the tallest shelves were chest-high, allowing customers to see from one end of the store to the other. Big TV’s are still a big part of the store, but they were mounted just two-high on the walls, rather than the floor-to-ceiling wall of TV’s that customers see in most other Best Buy stores. The store also does away with a separate section for musical instruments.
At the meeting, Investors were hoping for an update on the company’s search for a permanent CEO or an update on the company’s restructuring plan, which involves closing 50 locations, cut 400 corporate jobs and trim $800 million in costs.
But that was not given. Also not in attendance was founder Schulze, who has said he is exploring options for his 20 percent stake, leading some to speculate he might bid to take the company private, or sell to a private equity company.
Shares of Best Buy fell 82 cents, or 4 percent, to $19.48 in late afternoon trading. The stock is down about 13 percent since the beginning of the year.
Roughly 170 shareholders and employees attended the meeting in the auditorium at the Best Buy headquarters in Richfield.
Also on Thursday, Best Buy raised its dividend a penny per share to 17 cents, payable on Oct. 2 to shareholders of record as of Sept. 11.
Associated Press Writer Joshua Freed contributed to this report from Richfield, Minn.