Best Buy's interim CEO made his case with analysts for how he would remake the troubled retailer: "Bold actions are required."
It was the G. "Mike" Mikan show on Wall Street Tuesday.
The fill-in Best Buy Co. Inc. CEO spoke with analysts on a conference call to presumably discuss first-quarter earnings. But in reality, the call gave Mikan a chance to convince investors the Richfield-based company should drop "interim" from his title. Mikan, a former UnitedHealth executive and current Best Buy board director, is a candidate to replace former CEO Brian Dunn, who resigned last month.
And like any incumbent with Wall Street's ear, Mikan made the most of his opportunity, some analysts say.
"He was acting like he is the CEO," said Colin McGranahan, a retail analyst with Sanford Bernstein & Co. "He's charging hard out of the gate."
Earlier this week, Best Buy said it hired the executive search firm Spencer Stuart to help the company find a CEO within six to nine months. Whether that's Mikan or someone else, that person faces a tough situation.
Sales at stores open for at least a year fell another 5.3 percent in the first quarter compared with a 3 percent decline during the same period in 2011. Overall revenue increased 2 percent to $11.6 million.
Best Buy said profits from continuing operations totaled $161 million, or 47 cents a share. Excluding restructuring charges, adjusted net earnings were 72 cents a share, which beat Wall Street estimates of 59 cents. But analysts remained unimpressed in the face of Best Buy's anemic sales growth and shrinking profit margins.
"The reality is that nothing has changed yet," Christopher Hovers, a retail analyst with JPMorgan, wrote in a research note. Best Buy stock may be undervalued, but the company has not yet offered investors a reason to buy its shares, he said.
Best Buy stock rose 29 cents, or 1.6 percent, to close Tuesday at $18.46.
But all ears turned to Mikan Tuesday, who sounded anything like a caretaker CEO one normally associates with "interim," analysts said.
"Bold actions are required," Mikan told analysts on the conference call. "Tough decisions will be made. We must take a fresh look at our investments and the entire business. And I can assure you, there will be no sacred cows."
The call also offered Mikan an opportunity to rebut critics who say he lacks retail experience, especially to run the a company that generates more than $50 billion a year in sales.
"I'll concede the limited retail experience," Mikan said. "I think there are other things that I can bring to the organization. One is just a clear, unbiased approach to evaluating the strengths and weaknesses of the business. A change mentality. A focus on priorities and investment returns mentality."
Mikan also said his time at Optum Health, one of UnitedHealth's fastest-growing businesses, made him appreciate data analytics, using large amounts of information to manage inventory and predict consumer behavior. "A good example of what I envision is the way our Best Buy Mobile team stays connected with customers," he said. "Best Buy Mobile uses technology and information about their needs to ensure they come back to Best Buy for follow-up assistance and upgrades. We will do more of this. Much more. And dive much deeper."
Though Mikan's presentation lacked specifics, his poise and confidence won admirers.
"Mikan was impressive," said Jeremy Brunelli, an analyst with Consumer Edge Research in Stamford, Conn.
So much so, that some analysts believe it's Mikan's job to lose.
"Odds are increasingly small" that Best Buy will hire someone else as CEO, McGranahan of Sanford Bernstein said. "You don't act like that unless you believe you're the front-runner."
Thomas Lee 612-673-4113