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Now: Joly has adopted the exact opposite approach, focusing most of Best Buy’s attention on fixing its core U.S. stores and exiting noncore operations like its venture capital business and Best Buy’s European joint venture with Carphone Warehouse.
Joly has embraced the store-within-a-store model, striking exclusive partnerships with Samsung and Microsoft to establish their own stores within a Best Buy box. The partnerships form a key part of his overall campaign to reallocate store space away from commodity items like DVDs and toward higher-growth merchandise like smartphones and tablets.
Verdict: Wall Street loves it. After all, Best Buy is predominantly a retailer so fixing the business that generates about 85 percent of annual revenues makes sense. But critics say the company still lacks a long-term vision.
Then: At times, Best Buy appeared indecisive and listless. Analysts privately said Dunn wasn’t up to the job and lamented the absence of strong leadership. And Wall Street was initially skeptical of Joly.
Now: Joly’s hiring of Sharon McCollam, a well-respected retail executive known for never missing an earnings target, did much to boost investor confidence in the company.
Joly also performed well during the company’s Investors Day in New York in November and at this summer’s annual meeting, offering a level of detail and candor largely missing before his arrival.
Verdict: Since Joly joined Best Buy, shares have jumped 72 percent to Friday’s close of $30.37. Enough said.
Then: Former and current employees describe a chaotic workplace where projects were often started and abandoned without any accountability. The company often spent money on travel and parties to entertain employees and suppliers.
Now: Joly has worked hard to instill a sense of discipline and rigor to headquarters and stores. He ended Results Only Workplace Environment (ROWE), which allowed employees to control their schedules, including when or even whether they showed up at the office.
Under Joly, the company has already shaved about $295 million in annualized costs, with another $400 million or so on the way over the next few years. Best Buy has laid off hundreds of corporate employees, including 400 in one fell swoop earlier this year and incrementally ever since March.
Joly has also adopted the Net Promoter Score (NPS) to measure employee performance and customer satisfaction. Using NPS, Best Buy also wants to determine why a shopper left a store without buying something.
Verdict: Layoffs and empty buildings on the Richfield campus have sapped morale but the company reports high “engagement scores” among remaining employees.
Thomas Lee • 612-673-4113