Dive Brief:
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Best Buy’s shares have been on a wild ride the past few days as rumors circulated on Friday that CEO Hubert Joly, a French native, is among executives being courted by French retail giant Carrefour, the Minneapolis Star Tribune reported on Friday.
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Joly released a statement disputing the claims almost immediately after shares began to dip, saying, “Let me be clear, I am fully committed to Best Buy’s continued transformation and have absolutely no plans to leave.”
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Brazilian newspaper Economico Valor on Friday reported that Joly was among the top contenders to succeed Carrefour chief executive George Plassat, whose term ends in May 2018. Joly is a favorable candidate thanks to his turnaround efforts at Best Buy, but his lack of experience in food retail was of concern, according to the report.
Dive Insight:
Best Buy was one of the few retailers that analysts applauded for avoiding the holiday pitfalls that ailed many other brick-and-mortar retail chains. It's improved shopping experience, both online and in stores, has spurred a positive trajectory for the year ahead, and Joly has been instrumental in its turnaround.
Rising e-commerce sales and improving demand for home theater, connected home, wearable electronics and smartphones helped the electronics retailer handily beat third quarter expectations. Q3 net income of $194 million, or 61 cents per share, were up from $125 million, or 36 cents per share in the year-ago period. Net sales rose 1.4 percent to $8.95 billion, beating the average analyst estimate of $8.85 billion. Increased traffic, higher average order values and higher conversion rates contributed to the results, the company said.
Best Buy has been meeting a challenge in the space from Amazon, which is increasingly taking market share, but good customer service is the key to keeping a competitive edge, Joly has said, and brick-and-mortar stores are a powerful tool. “Year-over-year, our Geek Squad agents also drove more customer interactions across our channels and helped more customers use and enjoy their technology products,” Joly said last spring. Best Buy has also leveraged stores for online order fulfillment.
Indeed, Moody’s Investors Service singled out Best Buy in a report last year about brick-and-mortar retailers that are successfully leveraging their stores to boost online sales. Joly has also repeatedly assured investors that his cost-cutting measures are long term, to “establish a lean culture.” In a May conference call with analysts, he said, “I want to stress that this is not an isolated short-term cost reduction program ... This approach requires collaboration across teams and fractions, and we are building the organizational capabilities, mindset and habits necessary to sustain changes.”