Best Buy Ousts 2 Execs., Expects 3Q Profits to Decline
Best Buy Company, Inc., on Wednesday announced that two of its senior executives are “being removed” as part of a reshuffling that the company hopes will make it more agile.
Mike Vitelli, president of Best Buy’s U.S. operations, will depart the company in February, and Tim Sheehan, executive vice president and chief administrative officer, will leave at the end of the month, the company said.
The departures will eliminate a layer of top management in Best Buy’s U.S. operations and will result in a leaner structure that will make the struggling electronics retailer more responsive to business opportunities and challenges, the company said.
“One thing I have learned in helping turn companies around is that a business needs to have a nimble organization,” Hubert Joly, who took over as Best Buy’s CEO and president in September, said in a statement. “Our new organization will help build a closer connection to our customers and front-line employees, as well as accelerate our transformation.”
Vitelli and Sheehan are not the first executives to depart since Joly took the reins. Earlier this month, Best Buy announced that its chief financial officer, Jim Muehlbauer, will resign from his post in February. While the company at the time declined to provide further information about Muehlbauer’s exit, a Star Tribune report indicated that Muehlbauer would step down so that Joly can recruit his own management team. The company has since been searching for a successor.
News of the executives’ departure comes several months after the company disclosed in regulatory filings that it had awarded retention packages, collectively worth about $10 million, to four executives—including Vitelli and Muehlbauer. The company said at the time that the awards were “necessary to enable a stable CEO transition and appropriate continuity of leadership.” Those awards, however, were granted prior to Joly taking the reins. Nevertheless, Vitelli won’t leave empty-handed. He’ll receive “a lump sum payment of $1,450,000,” along with 123,000 vested shares of Best Buy stock, the company revealed in a U.S. Securities and Exchange Commission filing.
Joly joined Best Buy at a time when the struggling retailer is attempting to turn itself around amid declining sales and increasing competition from online vendors.
The company said Wednesday that its profits for the third quarter—which ends November 3—will be “significantly lower” than its profits from the same quarter a year ago. It also expects sales at stores open for at least a year—a key measure of a retailer’s health—to fall 3 percent to 5 percent compared to a year earlier.
Joly has said that his blueprint for turning the business around is likely to come in several phases. His plans so far have included cutting non-salary expenses and luring holiday shoppers with a three-part strategy that involves offering competitive prices, stocking the right amount of popular products, and boosting customer service. He has also stressed giving employees more training in order to boost store sales.
Joly will host a meeting with investors on November 1 to discuss his strategies. The meeting will take place just two weeks before founder and former chairman Richard Schulze is expected to submit to the board of directors an $8 billion to $10 billion bid to take the company private, according to a Star Tribune report. Schulze, who left the company’s board in June in the wake of a scandal involving former CEO Brian Dunn, has been working on a private takeover attempt for several months.
Best Buy is Minnesota’s third-largest public company based on revenue, which totaled $50.7 billion for the fiscal year that ended in March.