Best Buy's (NYSE: BBY) annual meeting wasn't a fiery affair.
Short of a near miss on a proposal relating to the non-binding advisory vote to approve executive compensation, it was business as usual at the consumer electronics giant.
Best Buy's dividend increase may have generated the most attention in light of cost cuts elsewhere, but it's not as if interim CEO Mike Mikan didn't shed some light on the turnaround plan for the company.
To be fair, the plan isn't all that different from the one that former CEO Brian Dunn shared with investors before having to leave the company under saucy circumstances. Best Buy wants to improve employee training -- a third of its sales force will receive intensive training -- and beef up its services business.
No one is going to object to Best Buy's investment in training, but what will the end goal be? If the plan is to make its sales floor more knowledgeable on the merchandise, this might be difficult, as product life cycles go by pretty fast these days. If the increased training will be about making the employees more successful at selling high-margin services and product protections, customers will feel cheated once they walk out the door.
There is no easy fix at Best Buy.
Apple (Nasdaq: AAPL) last week announced that it would be pushing through a 25% pay-rate hike at its stores. How is Best Buy going to deal with its sharpest hires flocking to the nearest Apple Store? The employees have already seen Best Buy close dozens of stores in recent weeks. Is morale boosting going to be part of the intensive training?
Best Buy knows that its biggest problem right now is Amazon.com (Nasdaq: AMZN) and its dot-com peers swiping market share from Best Buy. Showrooming is a monster, and Best Buy knows it.
"Ending this trend is our No. 1 priority," Mikan said during last week's shareholder meeting, as retold by The Wall Street Journal.
However, recognizing the problem isn't the same as finding a solution. The Oklahoma City Thunder knew that stopping LeBron James was its top priority last week during the NBA finals. It couldn't. It lost.
Taking a page out of the playbook of PC companies moving toward business services as higher-margin solutions to stagnant box sales, Mikan wants to beef up Best Buy's presence in selling tech services contracts to major companies. I don't know. I'm not sensing that "Let's turn to Geek Squad" or "Let's give Best Buy a crack at our business" is something that boardrooms will be saying a lot in the coming months.
The important thing here is that Best Buy isn't giving up, and it's simply not going to repeat the steps that have failed in the past. The safer bet right now is to bet against Best Buy than to bet for it, but at least it's willing to tweak its fading model while there's still time.
Best Buy is not a good buy
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