Was Best Buy's Latest Decision a Bad One?http://www.fool.com/investing/general/2012/10/25/best-buys-bad-decision.aspx Andrew Marder
October 25, 2012
For Best Buy (NYSE: BBY ) , the bad news seemingly has no end. Today, the company updated third quarter guidance, and announced the departure of the head of U.S. operations, Mike Vitelli. In the release, CEO Hubert Joly said, "One thing I have learned in helping turn companies around is that a business needs to have a nimble organization." The departure marks the beginning of a whole new structure for Best Buy, which the company hopes will be better attuned to customers and employees. If the stock price is any indicator, the market is doubtful.
Changes at the top, failure at the top
Best Buy has been on the rocks all year and, last quarter, it posted a 3% decline in same-store sales. Revenue also fell 3%, and the company brought Joly on board in September to try and turn the chain around. One of his reported strengths is in dealing with large, international brands and workforces. Joly's announcement today emphasized that the current structure was getting in the way of the company moving quickly and connecting with customers.
It looks more like Joly wants more control over the company. In the older structure, Vitelli would have had a lot of say in the management of the company, and changes could probably be held up at his level without too much oversight from Joly. Now, the heads of retail and online will report to Joly in a more direct fashion, giving the CEO the ability to quickly act on projects that he thinks are worthwhile.