Who's in charge of Best Buy's international operations?
- Blog Post by: Thomas Lee
- October 5, 2011 - 3:47 PM
Is it me or does Best Buy Co.'s international operations seem...well, uneven?
In this past year alone, the company has shut down its branded-big box stores in Turkey and China. British press is ripe with rumors of Best Buy closing similar stores in the UK. Actually, several stories published at different times have said the company is "reviewing operations," a process that seems have to dragged on for months now.
And then last month, the company confirmed rumors that it might re-open stores in China, a move that confused and angered some on Wall Street.
"They had alluded to this on the last conference call during the Q&A, but quite frankly, we thought this was more of a discussion than a strategy being implemented,." Dave Strasser, an analyst with Janney Capital Markets in New York. "We believe management owes shareholders a more thorough explanation of this decision. We don't care if it's just one store, it is wrong, and an affront to shareholder value."
Ouch. And this comes from a guy who actually likes the stock.
In an interview with the Star Tribune, CEO Brian Dunn blamed the episode on a misunderstanding. Analysts could have confused the company's plans to open Best Buy Mobile stores within Five Store stores in Nanjing, he said.
That seems like a stretch. But in any case, there clearly was a disconnect between the company and the Street.
Dunn seems like he has plenty on his plate. The company's same-store sales in the United States have been falling. At the same time, Best Buy is aggressively pushing its ambitious multi-channel digital strategy, including the expansion of Best Buy Mobile and the redesign of older stores. Throw in a unwieldy international portfolio and one wonders if Dunn is overstretching.
Maybe what Best Buy needs is an international chief, someone who can oversee all operations overseas.
Actually, the company used to employ one. Bob Willett was CEO of Best Buy International before he retired in 2009, just months before the company was to debut in Great Britain. The timing seemed odd, especially since Willett was a former executive with Marks & Spencer, one of Great Britain's top retailers. You'd think Willett's experience might have come in handy.
Dunn has no immediate plans to hire a global chief. He thinks the company is doing fine with the people already in place.
Matthew Arnold, an analyst at Edward Jones Investments, said it could've been a classic "chicken and egg" problem two years ago. Maybe Best Buy's international business at the time was not yet developed enough to warrant a full time international CEO, he said.
I don't think you can really make that argument though. Last year, Best Buy's international operations generated over $13 billion in revenue, about 26 percent of its overall sales.
Dunn told me he is satisfied with the corporate structure, specifically praising the talents of international CFO Dave Deno and Nicholas Wang, CEO of the company's Five Stare electronics chain in China. Best Buy bought the local retailer in 2008.
As for the future of Best Buy's branded big box stores in China, Dunn said the customer will ultimately determine its fate.
"I'm not wedded to any brand," he said. "If Five Star works the best, then we'll stick with Five Star."
Down the road, as the international businesses continues to grow and evolve, Dunn hinted that he might restore the international CEO position.
"There may come a time when we might add one or two positions in the space," he said.
© 2013 Star Tribune