Best Buy brings in a new CEO
Stacey Vanek Smith: Struggling electronics retailer Best Buy has named a new chief executive. Frenchman Hubert Joly will likely take the helm in early September.
Our own Scott Tong joins me live from Washington. Good morning, Scott.
Scott Tong: Good morning Stacey.
Smith: Scott, who is this new CEO?
Tong: Mr. Joly is now the CEO of a big hospitality company — the parent company of the hotel chains Radisson and the Country Inn & Suites, and the T.G.I. Fridays restaurant chain. That is until he takes over, as you say, in the fall. We should say, Stacey, Mr. Joly is a Frenchman.
Smith: Well give us a sense of some of the challenges Joly faces at Best Buy?
Tong: Oh, let us count the ways! The company lost $1.2 billion last year. Stocks have lost half their value; the bonds are now in junk territory according to Standard & Poor’s. And swirling around all of that, is we have this question of new management coming in to change things. And there’s talk of this publically-traded company going private.
The founder and the former chairman of Best Buy, Richard Schulze, wants to raise and borrow a whole lot of money to buy out the company from the current shareholders and he wants to make change. So the big word, “T” for turnaround, Stacey.
Smith: Scott, what happened at Best Buy? A few years ago I thought they were doing pretty well when their main competition Circuit City went bankrupt? What happened there?
Tong: The market’s changing. So there’s a rumor on the Morning Report that you’ve bought a new laptop, is that right? And you bought it where?
Smith: It was a while ago, but yes. I bought it online.
Tong: Well there you go — that’s our new marketplace, that’s the new competition in this space. And I just bought a TV — my first that’s bigger than 12 inches. And so we’re all buying online, and that’s what all these companies have to deal with now. So Best Buy is talking now about ditching its big box stores; trying to integrate more with the e-commerce platform — you know, a place where you can go to do web pick-ups and web returns. And hopefully we’ll hear a little bit more when they announce earnings tomorrow.
Smith: Scott Tong in Washington, thank you.
Tong: You’re welcome.
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