Best Buy CEO Keeps Job Following Investigation of Inappropriate Workplace Relationship

Best Buy’s first female CEO, Corie Barry, will keep her job following an independent investigation into allegations of an inappropriate workplace relationship with another executive.

The consumer electronics retail giant’s board didn’t disclose details of the investigation, saying in a statement, “Ms. Barry fully cooperated with the review, which has now concluded.”

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The investigation was prompted by an anonymous letter sent to the board alleging the relationship.

“The board takes allegations of misconduct seriously regardless of who is the subject,” the board of directors said in a statement. “When the board received an anonymous letter regarding Corie Barry, the Audit Committee immediately retained outside legal counsel to conduct an independent review. The board supports the continued leadership of the company by Ms. Barry.”

In a statement, Barry said, “I appreciate the board’s support and look forward to continuing to execute on our strategic vision to ‘Build the New Blue: Chapter Two.'”

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Best Buy CEO Under Scrutiny for Alleged Personal Conduct Issue

Corie Barry

Best Buy’s board of directors has opened an investigation regarding CEO Corie Barry having a previous personal relationship with a senior executive, who has since left the company and is now CFO of 24 Hour Fitness.

Barry, a former CFO of the consumer electronics retail giant, was named CEO last year after former chief executive Hubert Joly stepped aside to become executive chairman of the board.

The allegation linking Barry with former SVP Karl Sanft was outlined in an anonymous letter to the board, dated Dec. 7, 2019.

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“We encourage the letter’s author to come forward and be part of that confidential process,” a retail spokesman said in a statement first reported by The Wall Street Journal. “We will not comment further until the review is concluded.”

Barry, who says she is cooperating fully with the board, has been with Best Buy for 20 years, including a stint as president of the Geek Squad in 2013.

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Executive personal conduct has been an issue at Best Buy, which terminated former CEO Brian Dunn in 2012 after his inappropriate relationship with store staffer came to light. Founder Richard Schulze stepped down as well after the Dunn inquiry determined Schulze had failed to notify the board about the CEO’s conduct.

Best Buy Offering Third-Party Retail Pick-up, Subscription Tech Service, Lease-to-Own Options

Entering the winter retail season, Best Buy is diversifying its consumer electronics footprint and contact points in an effort to meet changing consumer habits.

As previously reported, the nation’s largest CE chain is offering free next-day shipping on myriad items through Christmas — a practice launched by Amazon Prime earlier this year.

Indeed, Best Buy saw domestic online revenue increase 15% to $1.4 billion in the most-recent fiscal period. As a percentage of total domestic revenue, online revenue increased 15.6% versus 13.8% last year.

To better facilitate consumers’ schedules, the chain launched 175 alternate pick-up locations in areas where either store locations are not convenient or the ship-to-home option is not desired. Locations include UPS stores and CVS pharmacies in select markets. Best Buy is also offering curb-side delivery in New York.

“To build awareness of these expanded experiences, we have already kicked off a comprehensive local market marketing campaign that includes stores, train stations, billboards, digital and email,” CEO Corie Barry said on the Nov. 26 fiscal call. “Based on our data, we believe there is much uncapped opportunity to serve New York clients in their homes.”

Best Buy has expanded its in-home Geek Squad concept to subscription-based “Total Tech Support,” providing unlimited Geek Squad support for all household technology no matter where it was purchased.

A new pilot program includes router setup and installation, parental controls to manage every device on the network, a subscription to Microsoft Office 365, and 1 terabyte of cloud storage along with all the standard Total Tech Support benefits.

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“It continues to get strong customer reviews [2 million registered subs] and members spend more and are twice as likely to use other services than non-members,” Barry said. “We are building on this early success to continue to deliver more benefits our members are asking for.”

The chain has also borrowed from the rent-to-own market, rolling out a proprietary lease-to-own option on select big-ticket items. The option is now fully operational in 45 states, including California and New York.

Barry said that since bowing the program nationally in March, about 65% of lease-to-own consumers are either new to Best Buy or haven’t made a purchase in the last year.

“This provides another purchasing option in addition to our existing strong credit card offer allowing us to help customers make purchases they might not otherwise be able to,” she said.

Best Buy Stock Slips After Missing Q2 Revenue Estimates, Ongoing China Tariff Concerns

Best Buy shares Aug. 29 fell as much as 9% in early-morning trading after the nation’s largest consumer electronics retailer revised downward fiscal year revenue estimates — largely due to ongoing tariff concerns with China.

Best Buy, like most CE retailers and manufacturers, relies in large part on Chinese-made products, including its line of Insignia TVs.

“This updated guidance factors in our best estimate of the impact of recent announcements regarding tariffs on goods from China … and general uncertainty related to overall customer buying behavior in the back half of the year,” CFO Matt Bilunas said in a statement.

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Meanwhile, entertainment same-store sales dropped 13.7% compared to a 8.5% increase  a year ago. The business unit includes DVD/Blu-ray Disc movies, video game hardware and software, books, music CDs and computer software.

International entertainment same-store sales dropped more than 20%.

Domestic entertainment revenue topped $441 million from $608 million during the previous-year period. The segment represented 5% of Best Buy’s domestic revenue compared to 7% last year.

Best Buy closed 13 large format stores in the period. Restructuring charges of $48 million primarily related to changes in the company’s domestic retail operating model. In the prior year, restructuring charges of $17 million relate to the closure of the company’s domestic Best Buy Mobile stores.

Regardless, new CEO Corie Barry said overall Q2 revenue grew 1.6% on top of a very strong 6.2% last year.

“We also delivered improved profitability driven by gross profit rate expansion and continued disciplined expense management, demonstrating the culture we have built around driving cost reductions and efficiencies to help fund investments,” Barry said in a statement.

Best Buy Looks Within for New CFO

Best Buy July 24 announced that Matt Bilunas, SVP of enterprise and merchandise finance, will be promoted to CFO effective July 29.

Previous CFO Corie Barry became the first female CEO of Best Buy in June in conjunction with Hubert Joly’s transition to executive chairman of the board.

A 13-year veteran of Best Buy, Bilunas has held both corporate and field roles along with domestic and international positions. Since 2017, he has been responsible for the company’s planning processes, including strategic planning, annual budgeting, monthly forecasting and capital planning.

Matt Bilunas

“Matt has been a key finance leader for a number of years and has played a very important role in creating and implementing our growth strategy,” Barry said in a statement. “After working closely with him for more than a decade, I trust him and am completely confident that his experience, skills and commitment to the company’s continued growth make him the perfect choice for this role.”

Bilunas joined Best Buy in 2006 as a director of territory finance based in Los Angeles. He later served as a director of international finance, senior director of enterprise finance, VP of e-commerce and marketing finance and VP of merchandise, e-commerce, marketing and ee-commerce finance.

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Prior to Best Buy, Bilunas worked at Carlson Companies, NRG Energy, Bandag and KPMG. He holds a bachelor’s degree in accounting from Iowa State University.

Best Buy Ups Corie Barry to CEO, Hubert Joly to Executive Chairman

Best Buy April 15 announced that its board of directors has elected Corie Barry, currently the company’s CFO, to become CEO, effective following the company’s annual meeting of shareholders on June 11.

At that time, current CEO Hubert Joly will transition to the newly created role of executive chairman of the board.

Barry – Best Buy’s first female top executive – will also join the board of directors, which will expand to 13 directors.

Separately, COO Mike Mohan was promoted to president and COO, while Best Buy searches for a new CFO.

Corie Barry

Since joining Best Buy in 2012, Joly has led the company through a successful transformation in the ecommerce era, including improved customer satisfaction, market share gains, comparable sales growth and improved margins, while achieving $1.4 billion in cost reductions.

In fiscal year 2019, Best Buy essentially delivered on its fiscal 2021 revenue and operating income targets two years ahead of schedule and returned $2 billion to shareholders through dividends and share repurchases.

As executive chairman, Joly will continue to lead the board while advising and supporting the CEO on key matters, such as strategy, capability building, M&A and external relationships.

In addition, he is expected to assume certain responsibilities at the request of the CEO, in areas like government affairs, community relations and leadership development.

Hubert Joly

“We have a tremendously talented, deep and dedicated leadership team at Best Buy,” Joly said in a statement. “Corie has played a critical role in developing and executing the proven growth strategy in place today, and I am confident she has the vision, skills, experience and leadership capabilities necessary to be our CEO.”

Barry joined Best Buy in 1999 and has held a variety of financial and operational roles within the organization, both in the field and at the corporate campus. She became CFO in 2016 and, prior to that, served as the company’s chief strategic growth officer.

Barry has also served as SVP of domestic finance and as the interim leader of Best Buy’s services organization.

“I am deeply honored to have been selected as Best Buy’s next CEO and look forward to working closely with Hubert, our board, and the exceptional Best Buy family to continue the momentum we have been able to achieve,” said Barry. “Today’s technology and consumer landscape creates tremendous opportunities for Best Buy to further expand and deepen relationships with our customers and employees, while continuing to deliver shareholder value.”

Prior to Best Buy, Barry worked at Deloitte & Touche. She holds bachelor’s degrees in accounting and management from the College of Saint Benedict, where she also serves on the board of trustees. Additionally, she serves on the board of directors for Domino’s Pizza.

Mohan’s responsibilities include oversight of all customer channels for Best Buy’s domestic business including retail, e-commerce and customer experience, services, home, and Best Buy Business. In addition, he leads category management, merchandising, marketing, supply chain, and real estate for Best Buy’s core U.S. business.

He joined the retailer in 2004 as VP of the digital imaging business group and has assumed additional responsibilities throughout his career across nearly all of Best Buy’s product and business categories. He has overseen the launch of thousands of store-within-a-store locations in partnership with leading technology vendors, the expansion of Best Buy’s own Magnolia and Pacific Kitchen & Home brands, the evolution of the company’s private-label brands, and the rise of emerging categories, such as 4K UHD TVs, health and fitness devices, and connected home products.

Before joining Best Buy, Mohan was VP and general merchandise manager for Good Guys, an audio-video specialty retailer that operated 79 stores in the western United States.

Mike Mohan

“Hubert has done a tremendous job leading Best Buy’s turnaround, assembling a deep team of talented leaders and instilling a clear strategy for future growth and lasting success,” said Russell Fradin, the board’s lead independent director. “As a board, it is important to build on this strong foundation by implementing a thoughtful succession planning process. We are confident that Corie and Mike are perfectly suited to continue working with Hubert and the rest of the management team to build on our success and drive Best Buy into the next phase of its transformation.”

 

 

Best Buy Shuffles Leadership, Eyes Transformation, Preps for Holidays

There’s been a leadership shuffle at Best Buy Co., the country’s top consumer electronics chain and a key seller of DVD, Blu-ray Disc and 4K Ultra HD Blu-ray, as the chain implements a new strategy and prepares for what it hopes will be a holiday sales rush.

Speaking with analysts on a Nov. 20 earnings call, CEO Hubert Joly said that during the preceding quarter, chief financial officer Corie Barry has been promoted to senior executive vice president, chief transformation and finance officer, “responsible for orchestrating our transformation,” according to a transcript of the call provided by Seeking Alpha.

Also, he said, Mike Mohan has been promoted to chief operating officer for the company’s U.S. business, “responsible for running the domestic business and, in partnership with Corrie, getting us to where we want to be as a company.”

Barry now oversees Best Buy’s strategic growth office, health business, “and a newly created transformation team in our digital and technology organization,” Joly said. “This focus on transformation underscores the major pivot we’re making as an organization with our Best Buy 2020 strategy as we are moving from a transaction to a relationship orientation and evolving from a product to a need-based solution orientation.”

Mohan has been with Best Buy since 2004 and has been responsible for Best Buy’s merchandising, marketing and supply chain functions. “He now has added all the channels including online, in-store and home, and our services teams to his scope,” Joly said.

Recapping the quarter that ended Nov. 3, Joly told analysts that the Best Buy team “just delivered another strong quarter and we continued to make progress in the implementation of our strategy. We are excited about our continued momentum and the opportunities we have ahead of us. So, specifically, in the third quarter, we grew enterprise comparable sales by 4.3% on top of 4.4% last year, and we delivered non-GAAP diluted EPS of $0.93, which is up 19% compared to last year.

“We also continued to enhance the experience we provide to our customers across the many ways they interact with us. Our top-line performance was driven by positive comparable sales across all channels, geographies and most product categories. Similar to the first half of the year, our strong revenue growth in the quarter was helped by favorable environment and driven by how customers are responding to the unique and elevated experience we are building.”

He praised the team for its “passionate focus on implementing our Best Buy 2020 strategy and on continuing to build the company that has a unique, competitive positioning and a strong human, purposeful culture.”

In October, Joly said, Best Buy “completed the acquisition of GreatCall, a leading connected health services provider for aging consumers. GreatCall’s life in its new home is off to a great start. We are working together to bring existing solutions to more customers and help fuel future growth in both the consumer and commercial markets. As such, and as a first step, we’ve recently rolled out new dedicated endcaps in our mobile department that showcase GreatCall’s easy-to-use mobile phone products and connected devices that are tailored for seniors and come with a range of relevant services…. Beyond this, we are excited about the opportunities that lie ahead for us to help aging consumers live longer in their homes with the use of technology, something that can provide significant benefits for the seniors and their families as well as for payers and providers.”

During the third quarter, Joly said, “we also continued to see encouraging results from our Total Tech Support program that we rolled out nationally in May. Customer signups as well as fulfillment costs are tracking in line with our expectations. Having a service that provides unlimited Geek Squad support for all their technology, no matter where or when they bought is a compelling and unique value proposition for our members. In addition, discounts on installations, protection and in-home services provide customers with another reason to grow their relationship with Best Buy.”

During the quarter, he said, Best Buy expanded its free in-home advisor consultation program to approximately 530 advisors compared to 300 at the nationwide launch a year ago. “As expected, it is proving out to be an important part of our strategy to build deeper and more relationship-based experiences with our customers,” he said. “We are continuing to invest in customer experience enhancements. So, for example, we just rolled out the ability for our customers to make an appointment with an advisor while they are still in our stores, rather than leaving the store and waiting for us to call and schedule an appointment.”

Joly also talked about the company’s efforts to improve the multi-channel shopping experience. “We’re especially excited about the ways in which we are making it easier for our customers to use the Best Buy app to shop online and in our stores,” he said. “Let me give you a few examples. Frequently, we see customers in-store trying to compare multiple products to one another including specs, price, reviews or features. With the Best Buy app, they can now use their phone to scan products and use an in-app feature to easily compare the results. If they want, they can save these results for later, if they’re still researching a purchase.”

Best Buy also recently launched a new functionality “that makes it much easier for customers to find open box items both online and in-store,” Joly told analysts on the call. “In addition to increasing the ease of shopping, this feature raises customer confidence in purchasing these types of products by being more clear about the meaning of different condition categories, as well as the eligibility of any existing manufacturer’s warranty or Geek Squad protection.

“The app also makes it easier for customers to determine whether a given product is currently available in the local store. Taking it one step further, we just launched a feature that can notify a customer, if a product in their online cart is currently available in the store they are in. This is helpful because customers often use the online cart as a way of keeping track of products they’re interested in. In fact, 72% of customers who use the app come into one of our stores with an item already in their cart and we now have the ability to tell them in the moment that the product is available for purchase.”

Also new is the “On My Way” feature, which allows customers buying large items to use the app to tell their local store that they are on their way to pick up their purchase, so that when they get there the item is available for pickup at the front of the store.

“These innovations along with the dozens we’ve rolled out in recent quarters, continue to blur the lines between online and physical shopping,” Joly said. “This is increasingly how our customers want to shop, and our innovation pipeline closely mirrors and enables this changing behavior. Consequently, our in-app conversion rate is up and the usage of the Best Buy app by customers while they are in our stores has increased significantly.”

Joly said that in the third quarter, “we continued focus on driving productivity and cost takeout to help offset investments and pressures in the business. We achieved approximately $90 million in additional annualized cost reductions bringing the cumulative total to $465 million since Q2 of fiscal 2018 towards our goal of fiscal ‘21 goal of $600 million. As we’ve discussed, we are investing in a range of enablers that are necessary to execute our Best Buy 2020 strategy. Most of them are multi-year investments in areas such as specialty labor, enterprise customer relationship management, knowledge management capabilities, our services platform and our supply chain.

“We’re tracking according to plan on our investments, and we are pleased to see how they are beginning to return. So, for example, in supply chain, we’ve seen our net promoter score for metro home delivery of large appliances and TVs increase more than 1,700 basis points over the last two years. This is due to investments in things like new metro delivery pads, located close to customers as well as a 60% increase in our distribution center square footage, which significantly decreases the reliance on outside space, and increases efficiency and accuracy.”

Looking ahead, Joly told analysts, “we are excited about our holiday plans and everything we have to offer our customers this holiday season. What matters of course during holiday includes assortments, deals, product availability, help, convenience and speed. And our team has put together a best-in-class assortment, prepared an amazing set of deals and ensured we have great inventory availability across other product categories we carry. This makes us a natural destination for everything tech related including TVs, computing, gaming, a growing toy assortment, phones, smart home devices, and large and small appliances. We released our Black Friday ad two weeks ago with 52 pages of the best deals of the holiday to help our customers find the best deals for their friends and families.

“Notably, this will be our first holiday with Total Tech Support and we excited to offer it to customers as a giftable item. This is the number one thing our retail teams have been asking for since the launch of Total Tech Support last May. It is a great way for gift givers to ensure the technology they’re giving to their loved ones, will be set up and working as it should be. Once again, this year, we offer our customers compelling delivery options such as free shipping on everything all season long, fast in-store pickup that can be ready in one hour, and same day and next day delivery options.

“We also materially upgraded our online gift center and our new gift finder will make it easier to get just the right gifts for kids, teens, parents, grandparents, significant others and families. For customers in our stores, our Blue Shirt Associates, Geek Squad agents and in-home advisors are ready to help our customers find great gifts and solutions. Whether you’re shopping digitally or in our stores, Best Buy can help customers find gifts for everyone on their gift list.”

Looking into next year, Joly told analysts, “I would say three things today. One, as you know, this is a dynamic situation with the expectation as of now that the tariff on the current list increases to 25% on January 1st; two my personal view is that while the journey may not be linear, the trade negotiations with China will progress; three, we believe that working together, vendors and our team, have at their disposal a range of effective ways to mitigate the effects of tariffs which is precisely what we are working on. And we’ll of course continue to update you on this matter.

“So, in conclusion, we are, as you can tell, energized by our continued momentum and overall performance and encouraged by the progress we’re making in implementing Best Buy 2020: Building the New Blue strategy. We see significant value generation opportunity ahead of us by successfully enriching lives with technology and providing services and solutions that solve real customer needs.”