It wasn’t so long ago that some investors thought Best Buy’s days were numbered.
On Tuesday, company officials’ unbridled optimism about the future was on full display at the electronics retailer’s annual shareholders meeting.
There were no questions about showrooming, or matching rock bottom prices with online retailers. In fact, competitor “Amazon” never even came up.
“We are confident in our future,” Hubert Joly, Best Buy’s chief executive of nearly three years, told a room of about 100 shareholders and company officials.
The board on Tuesday solidified Joly’s reign over Best Buy by officially adding the title of chairman to his role. The bureaucratic move signified the end of an era of turmoil that led to mass turnover among the company’s top leadership a few years ago.
“Hubert and the senior leadership of this company have done a remarkable job in turning this company around,” said Hatim Tyabji, the outgoing chairman who is retiring after 17 years on the board.
In the coming year, Joly pointed to various opportunities to expand Best Buy’s business: increasing appliance sales, revamping in-home services offered through the Geek Squad and pushing sales around life events such as graduations and weddings.
“We are here to play to win,” Joly said. “This is not about playing defense. This is about playing offense.”
To be sure, it won’t be smooth sailing. The retailer continues to face fierce competition from online retailers and is still dependent on the up and down cycles in consumer electronics. But Best Buy has been working to stabilize its business as it navigates that rocky terrain through Joly’s Renew Blue turnaround strategy.
When he first announced that plan in November 2012, he reminded shareholders that the company was facing two main challenges: declining comparable store sales and declining margins. But in the last fiscal year, he noted, the company saw its first increase in U.S. same-store sales in several years and its operating income rate also rose a percent.
The improved performance also comes as Joly has cut more than $1 billion in costs from the company and funneled some of those savings into matching prices, adding in-store shops from many of Best Buy’s vendor partners, and improving the company’s online prowess. He also recently announced another round of cost-cutting, this time $400 million over the next couple of years.
At the meeting, shareholders also approved the company’s executive compensation plan in the annual nonbinding “say on pay” vote. Best Buy’s shareholders have become increasingly satisfied about this measure in recent years as the company has improved and has further linked pay to performance. Whereas only 38 percent of shareholders approved of its compensation plan in 2012, 83 percent did so in 2013 and 98 percent did so last year. This year’s vote totals should be released in the coming days.
Attending the meeting on Tuesday was Dick Schulze, the founder of Best Buy, whose relations with the company were strained a few years ago when he stepped down as chairman following an investigation that found that he withheld information about the alleged misconduct of then-CEO Brian Dunn. Tyabji became chairman after that.
Schulze is now on good terms with the company, serving as “chairman emeritus,” and is still its largest shareholder.
“We are honored to have you here,” Tyabji told Schulze at the meeting.
Schulze stood and waved to the crowd of about 100 as they clapped. As chairman emeritus, Schulze was given the right to nominate two of his representatives to the board. But he has told the company he doesn’t plan to nominate a replacement for Al Lenzmeier, a former Best Buy president, who has retired from the board. One of his other representatives, former CEO Brad Anderson, was re-elected to the board.
Outside the meeting, though, it was not as tranquil. About 50 people protested along Penn Avenue as part of the continuing janitors’ strikes around the region coordinated in part by advocacy group Centro de Trabajadores Unidos en la Lucha. They held signs that said, “Renew Blue, For Who?” as they called for higher wages and better sick and family leave policies.
The janitors who clean Best Buy stores are employed by Kellermeyer Bergensons Services, an Ohio-based company. Kellermeyer signed a deal with the Service Employees International Union in December acknowledging the rights of workers to form a union.
In a statement, Best Buy spokesman Jeff Shelman said the retailer understands that custodial work is hard work and appreciates its janitors.
“We are an interested third party in this,” he added. “We obviously do business with many companies, so we do not believe it is our place to be drawn into a dispute between a vendor or a supplier and their employees.”