Minneapolis - Best
Buy interim CEO Mike Mikan pulled no punches in assessing the company's status
during his first earnings call with investors this morning.
In an opening
statement, Mikan acknowledged that Best Buy was caught "flat-footed" by a
rapidly evolving marketplace and that its stores no longer "wow" customers or
provide a unique shopping experience.
"Right now we're
not even close to good enough," he said.
disruptions create new opportunities, he noted, and promised to unveil a long-term
strategic "blueprint" this summer that will return Best Buy to its leadership
role. The company is already in turnaround as it continues cutting costs and
right-sizing the business, he said, but it must also improve training, employ
analytic tools to leverage its vast database, reduce store size (but not store
count), and bolster its e- and m-commerce operations.
Mikan said e-commerce
is rapidly outstripping conventional shopping, and is creating an economy
"without boundaries" as consumers demand virtual products and services as much
To address the
change, Best Buy is building a first-class team to create a world-class
e-commerce capability, and plans to tap the full potential of mobile devices,
advantages, including deep vendor relationships and the No. 1 position in key
CE categories, "We need to acknowledge the truth," Mikan told analysts. "We
need to change substantially" to become more nimble, intelligent and relevant,
and he promised "tough decisions" and "bold actions" in which no sacred cows
would be spared.
During the first-quarter
conference call, Mikan, a four-year board director, deflected a question from an
analyst asking why it took the unseating of chairman Dick Schulze and the
resignation of CEO Brian Dunn to step up the strategic overhaul.
Also during the
call, U.S. operations president Mike Vitelli observed that an increasing number
of TV vendors are employing uniform pricing policies (UPP) in order to realize
a better return on investment for their products. So far the TV outlook for
Best Buy, and the industry, remains essentially unchanged from last year, he
said, with unit volume growing and average selling prices (ASPs) falling
modestly. The forecast could change, he added, once the recently introduced
2012 product lines have a chance to fully enter the marketplace.
Buy confirmed that U.S. chief financial officer Ryan Robinson is leaving the
company on Friday. His departure, for the CFO post at a chain of urgent care
centers, follows this month's resignation of international CFO Dave Deno, who
assumed the same position at national restaurant chain operator OSI.
Their exits bring
to five the number of senior execs that have left the company over the last 10
weeks, including chief technology officer Robert Stephens and chief marketing
officer Barry Judge, as well as Dunn.