Chief executives who have no real plans to turn around troubled companies often offer generalities in the place of details. Put another way, they put vagueness in the place of tactics, and hope in the place of action. The new CEO of Best Buy Co. Inc. (NYSE: BBY) did precisely this as he tried to talk around the fact that he has no clue how to right the large consumer electronics retailer.
Best Buy held a meeting for securities analysts, and new CEO Hubert Joly had nothing useful to say. He described his company as if it was currently a raging success:
Among Best Buy’s great strengths he included:
We are the leader in a growing and fragmented market and our market share has been stable or growing in most product categories. We have a highly skilled and engaged workforce that is passionate about customer service. We have a large customer base with 40 million active members in our loyalty program. And we have a unique and compelling value proposition, providing distinctive customer benefits — including access to the latest devices, impartial and knowledgeable advice, competitive prices, the convenience of a multi-channel shopping experience and expert support via our Geek Squad. This is a very strong platform on which to build.
Investors who have driven the stock ever lower apparently have missed the advantages of these things.
Joly did set goals, but they were goals without time frames and without specifics.
- Putting the “pedal to the metal” in digital by investing in the shopping experience and leveraging its multi-channel assets.
As if his predecessor did not put up a losing fight against Amazon.com Inc. (NASDAQ: AMZN).
- Driving higher comparable store sales by improving retail execution both online and across the company’s stores, and by evolving the allocation of physical space across product categories to maximize revenue growth and profit contribution.
Those are basic merchandising programs that almost all large retailers already have in place, including Best Buy.
Best Buy aspires to achieve over time an operating margin of five to six percent and a return on invested capital of 13 to 15 percent.
Aspirations worthless to investors, and so is a plan for success without a timetable.
- Continue Best Buy’s leadership role in positively impacting our world and making it a better place.
A mission best suited to religious groups and the Red Cross.
Douglas A. McIntyre