Best Buy CEO Hubert Joly took a moment to revel in Renew Blue.
As shareholders gathered Tuesday in Richfield for their annual meeting, the man who has been widely lauded for getting the world’s biggest electronics retailer back on track said the first year of the company’s turnaround plan has been strong. Best Buy is, so far, exceeding its goal for cost cutting and finding $860 million in savings. It’s also using those cuts to offset expenses such as a price matching, which Best Buy is using to stay competitive.
“I’m happy to report that our transformation is off to an encouraging start,” Joly told a crowd of investors and employees gathered inside Best Buy’s Richfield headquarters.
The retailer’s strong performance drove its decision Tuesday to raise its quarterly dividend by 12 percent, or 2 cents a share. The bigger-than-expected increase means that investors will now get a payout of 19 cents a share.
Joly told shareholders that the move was indicative of the retailer’s improved cash position and its confidence in the power of its multichannel business model. Still, investors have been more skeptical about the company’s turnaround plan, and that can be seen in Best Buy’s stock price.
After tripling in value last year to over $40, Best Buy shares tumbled earlier this year due to deeper-than-expected pressure on holiday revenue and tepid same-store sales. The stock rose 69 cents, or 2.4 percent, to $29.49 on Tuesday.
While the company has seen declines in domestic same-store sales, Joly said those numbers are beginning to stabilize. He also noted during the meeting that online sales were up 20 percent in the past year.
Despite Joly’s updates, the business portion of the annual meeting was fairly brief. Shareholders approved four proposals, including re-electing seven board members and signing off on the company’s executive compensation plan in the nonbinding “say-on-pay” vote.
In 2012, only 38 percent of shareholders approved of Best Buy’s executive pay, but that percentage improved to 83 percent last year after the company reached out to major shareholders and made moves to more closely link pay with performance.
The company is expected to post the results from this year’s election within four business days.
In the coming year, Joly said Best Buy will leverage its new ship-from-store capabilities and roll out more store-within-a-store concepts to locations with vendor partners such Magnolia, Sony and Samsung.
He also fielded some pointed questions from shareholders. One asked Joly if Best Buy would open again on Thanksgiving Day, noting some employees were unhappy and there were questions about its success.
Joly said that the company has not finalized its plans for the year, but he noted that in 2012, Best Buy opened its stores at midnight on Black Friday while many of its competitors opened earlier. “Clearly, trying to win the battle without playing is difficult,” he said.
So Best Buy moved up its opening time to 6 p.m. last year. Joly said the experiment showed positive results, as it led to shorter lines for customers at the outset of the night.
“Before, people were waiting in line at 11 p.m. or midnight in the cold,” he said.
He added that he was grateful for the sacrifices of employees, many of whom volunteered for those hours.
He was also asked about what the company is doing to prevent a data breach like the one experienced by Target.
Joly didn’t offer specifics but said he had empathy for his crosstown rivals and said Best Buy is doing everything it can to protect customer information.
“We have enemies,” he said. “The frequency and level of attacks is growing exponentially. These attackers are increasingly sophisticated so it’s a constant battle and there’s no point at which we can rest on our laurels.”
Joly also renewed his call on Congress to pass legislation that would force online retailers to collect sales taxes as brick-and-mortar retailers already do.
Joly, who has been more vocal in recent months on the issue, said doing so would fix a “structural impediment” to Best Buy, which has been in a fierce battle with online retailers for years. He asked citizens to contact Congress members to prod them to pass the bill, as the Senate did last year, before the end of the legislative session.
Joly said the absence of such laws gives online retailers an unfair edge — as much as a 10 percent price advantage — on brick-and-mortar retailers.
“The longer we wait, the more jobs will be lost,” he said.