Best Buy has been in the news a lot lately, with the scandal involving former CEO Brian Dunn and subsequent resignation of founder and chairman Richard Shulze on top of a fiscal year that saw the company’s GAAP loss widen to $3.36 cents per share and comparable-store sales slip 1.7%.
Understanding that an image overhaul was needed, Best Buy’s leadership went on the offensive at its annual shareholders’ meeting Thursday, ensuring attendees that the company would once again become the leader in consumer electronics and services.
While Best Buy’s earnings and comps were disappointing, interim CEO Mike Mikan noted that during the year the company reported adjusted revenue of $50.7 billion, and that its share of the U.S. CE market grew, especially in such categories as mobile phones and tablets.
Still, Mikan acknowledged that the year was far from perfect and that the company’s “operating performance was well below (its) full potential.”
But Mikan wasn’t there to talk about the past. His focus was on the future and how Best Buy could right its wrongs and create a better customer experience. He spoke on how his new role as interim CEO has enabled him to better understand how things operate from the ground up and what changes needed to be made.
“Since taking the job, I’ve spent a lot of time listening and learning, from the point of view as a manager. I’ve visited Best Buy stores across the country. I’ve chatted with a lot of agents. I’ve listened to a lot of sales associates and Geek Squad agents, and I’ve watched them in action.”
Mikan highlighted the following ways Best Buy would be able to regain position in the marketplace:
Become more relevant, more intelligent and more nimble
Connect with customers in a deeper way and better understand their needs
Become a trusted advisor who solves problems, anticipates needs and meet them with a seamless multi-channel experience
Demonstrate renewed commitment to efficiency and productivity
Expand services offering, playing to advantage during slow product innovation cycles
Invest in employees with more training and better tools to maximize what they can offer to customers
Mikan addressed the two issues that continue to affect the company’s ability to gain market share, show-rooming and growing competition from Amazon.com.
In regards to show-rooming, or the customer practice of checking out the merchandise at retail stores and then buying them for less online, Mikan said that the best way to reverse that practice would be by “improving the customer experience, delivering the best price, and strengthening (the company’s) technology.”
In regards to Amazon.com, Mikan said, “Fair to say they are a competitor, but they are also a partner. No question that Amazon has a formidable technology platform. We’ve made every effort to be very competitive with it. We think that obviously there’s been a level playing field issue with their tax advantage status, we don’t think it is a tax issue as much as it is a fairness issue … We think we can compete on price, know we can compete better on service, because we know we have the service offerings and we know we have the technology experts.”
While Best Buy’s initiatives were all very promising, shareholders no doubt wanted to know how the company could improve its bottom line and increase its value. In that respect, Mikan assured them that the company would be less capital intensive and concentrate on improving returns and delivering cash to investors.