Interim CEO Shares Turnaround Plan with Best Buy Shareholders
At Best Buy Company, Inc.’s annual meeting on Thursday in Richfield, the company’s interim CEO told shareholders that Best Buy will become “more relevant, more intelligent, and more nimble.”
G. Mike Mikan—who took the helm as interim CEO in April following the sudden departure of Brian Dunn—acknowledged that the company’s “operating performance has been clearly well below our full potential,” and said the company hasn’t kept up with customers’ changing needs. He aims to “position Best Buy to regain its leadership position in this evolving marketplace” and described it as a “personalized technology solutions” company.
According to Mikan, Best Buy will refocus on improving customer experience and “strengthening technology expertise.” For example, the company will provide a new training program to thousands of employees. Those moves are meant to help achieve one of Best Buy's top priorities: curbing the practice of “showrooming,” or when people visit stores to view merchandise but then purchase the products from online retailers.
Mikan also said the company can “no longer just focus on the box.” Best Buy in March announced plans to shutter 50 big-box stores this year, and Mikan said Thursday that the company will increase its focus on ensuring a return on investments and look to further reduce its retail footprint.
The company “cannot be seen just as a hardware retailer,” Mikan continued, adding that Best Buy must focus on the future, and there “will be no sacred cows,” meaning nothing will be held so sacred as to be exempt from criticism or change.
A video of the annual meeting, which includes a question-and-answer session with shareholders, can be viewed here.
The investors to whom Mikan spoke were likely anxious to hear about a turnaround strategy for the company, which has recently experienced significant leadership turnover and a slump in stock price.
In April, Dunn abruptly resigned from Best Buy, and the company later released the results of an independent investigation, which found that Dunn violated company policy by engaging in “an extremely close personal relationship with a female employee that negatively impacted the work environment.”
The investigation also found that Richard Schulze, the company’s founder and then-chairman, had “acted inappropriately” when he failed to notify Best Buy’s audit committee after learning in December about allegations of such a relationship.
In the wake of the scandal, Schulze announced plans to resign from his role as chairman following Thursday’s annual meeting—but earlier this month he abruptly stepped down from that post and left the board; the company had previously announced that he would serve out the remainder of his director term, which goes through June 2013.
Schulze also said he would explore options for his 20.1 percent ownership stake in the company. The Star Tribune, citing “sources close to the situation,” reported that Schulze is exploring a bid to take the company private. Schulze was not present at Thursday’s annual meeting, the Minneapolis newspaper reported.
Several other key leaders left the company during the past several months, as well. Best Buy said in April that it had begun a search for its new CEO, a process that it expected to take between six and nine months. In May, Best Buy hired Chicago-based Spencer Stuart to assist in its search for a new chief executive. Mikan, who has served on Best Buy’s board since 2008, is among those being considered for the permanent position.
At Thursday’s meeting, a shareholder introduced a resolution that calls for annual elections for Best Buy directors, and investors subsequently voted on the proposal. A board member voiced support for the resolution and said the company will release the results of that vote, as well as votes on other matters, in a filing with the U.S. Securities and Exchange Commission sometime during the next several days.
Separately, the company said in a Thursday press release that its board approved a 6 percent increase in its quarterly cash dividend to 17 cents per share.