Best Buy S Turn Around Strategy
For the exclusive use of W. Zhou, 2015.
MH0023
0 0 7 7645065
MARNE L. ART HAUD- DAY
FRA NK T. ROT HAE RME L
Best Buy’s Turn-Around Strategy (2013)
CEO HUBERT JOLY BREATHED A SIGH OF RELIEF as he reviewed the 2012 end-of-year holiday revenue figures for Best Buy. After perhaps the most tumultuous year ever in the life of the company, he knew the numbers could be much worse. Despite being the world’s largest retailer of consumer electronics with $50 billion in annual sales, Best Buy’s financial situation was precarious. The company’s stock price had fallen from $45 to $15 per share over the past two years, a drop of roughly 60 percent.1 While revenues had been increasing at a marginal rate, both comparable store sales and overall profitability were showing a consistent negative trend. Earlier that year, Best Buy had been forced to report a 91 percent drop in profits during the second quarter compared to the same period in 2011;2 the third quarter showed a comparable 97 percent drop in operating income.3
So, yes, the fact that the company made $12.8 billion in revenues during the last nine weeks of 2012, compared to $12.9 million the year prior (a drop of just 0.4 percent), was welcome news indeed.4 As Joly had previously told investors, one of his first priorities was to stabilize the company before he could implement ways to improve its overall performance.5
Still, Joly was optimistic about Best Buy’s future. He had a knack for numbers, and behind all the red ink, he liked what he saw. After being appointed by the board in August, he spent his first week on the job in September working as a “blue shirt” in Best Buy stores in the Minneapolis/St. Paul area. Shortly thereafter, he held a threeday retreat with the company’s top managers, and once again emerged encouraged.6 As he said:
Best Buy is a company with an amazing history, enormous assets and great opportunities. I am eager to start working with everybody at Best Buy to define and take the actions that will
MH0023
0 0 7 7645065
MARNE L. ART HAUD- DAY
FRA NK T. ROT HAE RME L
Best Buy’s Turn-Around Strategy (2013)
CEO HUBERT JOLY BREATHED A SIGH OF RELIEF as he reviewed the 2012 end-of-year holiday revenue figures for Best Buy. After perhaps the most tumultuous year ever in the life of the company, he knew the numbers could be much worse. Despite being the world’s largest retailer of consumer electronics with $50 billion in annual sales, Best Buy’s financial situation was precarious. The company’s stock price had fallen from $45 to $15 per share over the past two years, a drop of roughly 60 percent.1 While revenues had been increasing at a marginal rate, both comparable store sales and overall profitability were showing a consistent negative trend. Earlier that year, Best Buy had been forced to report a 91 percent drop in profits during the second quarter compared to the same period in 2011;2 the third quarter showed a comparable 97 percent drop in operating income.3
So, yes, the fact that the company made $12.8 billion in revenues during the last nine weeks of 2012, compared to $12.9 million the year prior (a drop of just 0.4 percent), was welcome news indeed.4 As Joly had previously told investors, one of his first priorities was to stabilize the company before he could implement ways to improve its overall performance.5
Still, Joly was optimistic about Best Buy’s future. He had a knack for numbers, and behind all the red ink, he liked what he saw. After being appointed by the board in August, he spent his first week on the job in September working as a “blue shirt” in Best Buy stores in the Minneapolis/St. Paul area. Shortly thereafter, he held a threeday retreat with the company’s top managers, and once again emerged encouraged.6 As he said:
Best Buy is a company with an amazing history, enormous assets and great opportunities. I am eager to start working with everybody at Best Buy to define and take the actions that will