NEW YORK—Mr. Joly, are you ready for your close up?
When Best Buy CEO Hubert Joly meets investors in New York today, the affable Frenchman will be speaking to two constituencies: Wall Street and founder Richard Schulze. The former wants to know whether Joly has the strategy and fortitude to fix the struggling consumer electronics giant. The latter wants to know if he can trust Joly to run Best Buy should he succeed in taking the company private.
Since coming to Best Buy in September, Joly, a former CEO of Carlson, seems to have performed this delicate balancing act well. His concillatory approach to Schulze’s takeover attempt has eased tensions (for now). Plus Joly has won praise for his senior leadership team, including Shawn Score as U.S. retail chief and former Williams-Sonoma executive Sharon McCollam as chief administrative officer and chief financial officer.
But Joly will still facing tough questioning at his investor meeting. Investors already suspect Best Buy’s holiday sales will be bad. Just how bad is an open question. Schulze certainly would like to know. A source close to the founder told the Star Tribune that he will delay his takeover bid until mid-December to see whether a weak holiday performance will further depress Best Buy’s languishing stock price, now trading around $15 a share. Why pay $24 to $26 a share, as Schulze originally proposed in the summer, when you get away with $18 or $19 a share?
At the investors meeting, Joly will roll out lots of consumer data that he says demonstrates the situation isn’t as dire as one would suspect. Yes, Best Buy has problems but they are highly fixable, Joly will argue. For example, the company says only 15 percent of its customers actually engages in any type of showrooming (the act of looking at something in a store and then buying it later online) and those shoppers don’t do it frequently. What matters more to shoppers is selection, availability and customer service, according to thousands of surveys Best Buy has conducted. It’s well within Best Buy’s power to control these factors, Joly will argue.
Joly will also note that 40 percent of Best Buy customers who order online but choose pick their products in a store will buy additional items in that store. It sounds like a good sales pitch. But whether Wall Street buy what Joly is selling is an open question.