Departures reflect new CEO's desire to act quickly to rebuild sales, analyst said.
The rapid reshuffling of Best Buy's executive ranks by new CEO Hubert Joly accelerated Wednesday, as the company announced the departure of U.S. retail chief Mike Vitelli and chief administrative officer Tim Sheehan.
The pair join chief financial officer James Muehlbauer on a growing roster of senior executives pushed out by Joly since he took over as CEO in early September. Best Buy, a Minnesota retail giant with more than $50 billion in annual sales, said Vitelli will retire in February while Sheehan, who oversaw Best Buy's global supply chain, will step down at the end of the month. Muehl- bauer is already gone.
"When a new football coach comes in, they put in their own people, though [Joly's moves] have been pretty quick," said Laura Kennedy, an analyst with Kantar Retail consulting firm outside of Boston.
Best Buy also said Wednesday that Joly will host a meeting with investors on Nov. 1 to discuss his strategies, just two weeks before founder and former chairman Richard Schulze is expected to submit to the board of directors an $8 billion to $10 billion bid to take the company private.
Should Schulze reacquire Best Buy, Joly might be out of a job. Schulze has already recruited former CEO Brad Anderson and former chief operating officer Al Lenzmeier to run the company.
Despite the possible bid, Joly has no choice but to move fast. Best Buy has been struggling to increase sales as more consumers flock to the Internet, and the company on Wednesday warned that third-quarter profits will be "significantly lower" than the same period a year ago. Best Buy also said it expects that sales at stores open for at least a year, a key measure of retail growth, will fall somewhere between 3 and 5 percent as the company gears up for the crucial holiday shopping season.
"Bid or no bid, Joly has a company to run," said a source directly familiar with Joly's thinking who requested anonymity because he was not authorized to speak to the news media.
When Best Buy hired Joly, the former CEO of Carlson, he faced plenty of skepticism. Most analysts had expected board director and interim CEO G. "Mike" Mikan to get the job. Under Mikan, the company last June paid out $500,000 in retention bonuses plus stock to each of Best Buy's five top corporate officers, including Muehlbauer and Vitelli, to stick around.
And then there was Schulze, who left the company when a board investigation determined he had withheld information about former CEO Brian Dunn's alleged affair with a female employee. Schulze, who still owns 20 percent of Best Buy, had never met Joly and did not trust him, according to a source close to Schulze.
The source requested anonymity because of Schulze's ongoing efforts to buy the company. However, Joly is starting to win over Schulze's team, the source said, leading some observers to speculate that Joly will remain as CEO in a private Best Buy. To help Schulze prepare his buyout bid, Joly has granted permission to Schulze's team to speak to people across the company.
"Ever since the company hired Joly, [Best Buy's relationship with Schulze] doesn't seem that hostile," said Kennedy, the analyst.
Indeed, the source close to Schulze said "there was no question" that the founder approved of Joly's effort to remake the senior leadership team, especially Joly's decision to replace Vitelli with Shawn Score, a senior vice president who will run U.S. retail operations beginning Jan. 1. Recruited by former Best Buy International CEO Robert Willett to help launch Best Buy Mobile, Score currently oversees the company's connectivity business, which includes smartphones and tablets.
The source close to Joly said the personnel moves were not a reflection on Vitelli and Sheenan's performances, but were an indication of Joly's desire to eliminate top-level bureaucracy in order to speed up the company's ability to make decisions.
With Score, Scott Durchslag, a former Expedia president who now oversees BestBuy.com, and executive vice president and digital chief Stephen Gillett, Joly's senior team also reflects his desire to marry the company's physical stores with e-commerce, Kennedy said.
"Having one digital chief is not enough," Kennedy said. "They have to make digital work across the company."
Thomas Lee • 612-673-4113