Best Buy CEO Joly Considers Buying Electronics Brands
Best Buy Company CEO Hubert Joly is reportedly considering buying or licensing consumer electronics brands in order to secure more exclusive merchandise for stores as he attempts to turn the struggling company around.
According to a Bloomberg report, Joly said in an interview that examples of well-known brand names that Richfield-based Best Buy could purchase or license might include Hitachi and JVC.
Joly—who took the reins in September—also told Bloomberg that he plans to expand Best Buy’s private-label business, which includes the Insignia and Rocketfish brands, although he’s not interested in moving into manufacturing.
Another possibility he’s considering: leasing consumer electronics to homeowners and then generating fees from connecting and updating devices.
On Tuesday, just prior to addressing analysts and investors, Joly outlined key priorities of his turnaround plan, which the company is calling “Renew Blue.”
Among his goals: “Stabilize and then begin increasing” same-store sales, and “achieve over time” an operating margin of between 5 and 6 percent and a 13 to 15 percent return on invested capital.
For its most recent fiscal year, Best Buy’s same-store sales slid 1.7 percent—and the company recently announced that it expected same-store sales to fall 3 to 5 percent during its third quarter, which ended November 3. Meanwhile, Best Buy had an operating profit margin of about 2.1 percent during the most recent fiscal year; for its second quarter, the most recent for which data is available, its margin was down to 0.3 percent and the company reported an 11.1 percent return on invested capital.
According to Bloomberg, Joly told reporters on Tuesday that online and e-commerce together are his top priority, and the goal is to boost Best Buy’s share of U.S. online sales from 7 percent to 18 percent, the market share of its stores.
According to Bloomberg, a company booklet handed out at Tuesday’s meeting indicated that of the 1 billion visitors to Best Buy’s website last year, 1.3 percent bought something, but another 9 percent wanted to and didn’t because the site lacked product information, the desired product wasn’t available, and prices were too high.
Joly reportedly plans to “put the pedal to the metal in digital” in order to get website visitors to keep coming back and might consider add-ons like Amazon Prime, a $79-per-year service that provides free two-day shipping and instant streaming of movies and TV shows.
Best Buy’s recent turnaround effort has thus far involved shuttering big-box stores, shifting emphasis to smaller Best Buy Mobile locations, and cutting thousands of jobs.