× Hubert Joly Turned Around Best Buy. Now He’s Trying to Fix Capitalism.
Joly elevated Best Buy’s reputation in Asia. Now he wants to do the same here.
In his last weeks as Best Buy’s CEO, Hubert Joly tried his best to improve the tarnished reputation of the American consumer electronics retailer.
But it was too little, too late.
Shares of Best Buy are down 30% so far this year, and the company is now floundering.
The stock sank 6% Friday after Joly announced he would be leaving the company in August.
Best Buy said there was no sudden catalyst for Joly’s exit. But investors clearly weren’t thrilled with the results from Best Buy’s first quarter, when revenue fell more than expected and profits plunged.
Joly tried to turn around Best Buy’s reputation with its Chinese and Asian stores. Critics said Best Buy’s Big Box stores are too big and too expensive. Some Asian shoppers believe Best Buy only accepts Visa and MasterCard in the United States.
During a brief trip to China in June, Joly said that “our company is not what it needs to be” for the Chinese consumer.
Joly then tried to do something about it. He started holding meetings with management, including his Chinese counterpart, to “negotiate more transparent pricing.
“We need to invest in China to achieve greater scale and return to profitability,” Joly said in a letter to employees after that trip.
Joly tried to fix this overseas problem with the help of foreigners. He brought former Motorola CEO Gregory Brown, who is now Best Buy’s president and chief operating officer, to China for the very first time to evaluate Best Buy’s pricing and branding.
Joly also brought on noted British architect Norman Foster, whose firm Foster and Partners is best known for designing the One World Trade Center in New York. It is also responsible for offices in London and Shanghai.
Joly claims he’s succeeded in turning around Best Buy’s reputation with both executives in China and store managers in Europe.
“Our move to cut prices at retail and increase quality sales in our stores is beginning to show results, and we expect to see those investments pay off in the back half of the year and beyond,” Joly said in a statement after the first quarter.
Joly actually put his own money where his mouth is on his investment in Best Buy.
He bought nearly 1.8 million shares in Best Buy at an average price of $25.78 — around where the stock was trading Friday.
Joly also made the bold bet that a turnaround was possible. On his last earnings call with Wall Street analysts, Joly predicted that Best Buy would turn a profit during the second half of this year.
“We believe we can return the company to positive operating income this year and achieve $1.10 of non-GAAP EPS,” Joly said.
As far as replacing Joly, Best Buy quickly hired a leading executive from Zell/Oracle to step in as CEO. Hubert Reichelt, the CEO of European home services retailer Sicpain, will become the top Best Buy executive next month.
Reichelt will be Best Buy’s sixth CEO in the last 12 years.
It’s too early to know if Reichelt will have the same kind of success that Joly did. Best Buy’s board isn’t just looking for a temporary cure. Joly essentially rebooted Best Buy during his time there.