Yahoo Finance Why Best Buy's CFO departure matters
As shares of online behemoth Amazon (AMZN) continue to surge, Best Buy (BBY) shares dropped over 8% on Tuesday after forecasting disappointing second-quarter profit and announcing the departure of the well-reputed CFO Sharon McCollam.
McCollam’s departure could present a particular risk to the company because she was behind efforts to integrate the chain’s customer service and online operations, a notable bright spot during the quarter. Specifically, she was a leading figure in the company's key "ship-from-store" initiative, which allowed Best Buy to give customers more visibility to inventory that was available in nearby stores and online distribution centers. Previously COO at Williams-Sonoma (WSM), McCollam came out of retirement in 2012 to join Best Buy and invigorate the company’s initiatives.
“Three and a half years later, we are in a completely different place and are into the next phase of our journey as a company,” CEO Hubert Joly said, reflecting on strength of initiatives over the period when McCollam served as CFO.
In the first quarter, domestic online comparable store sales jumped 24%, one of the best periods of growth in the retailer’s history.
Best Buy’s stock has hung in over the last couple of years, but the company remains in “show me” mode as investors wait for management to prove it can accelerate growth.
Joly emphasized the importance of the digital experience for Best Buy. “The e-commerce channel is growing into its impacting the entire business. Specifically to the growth rate in e-commerce, the 24% growth rate is a very good number. It’s the cumulative effect of the investments we've been making in the last three years that are impacting the customer experience,” he said.
Joly added that the online experience has improved significantly in recent years. “It's a lot of small changes, both from the site itself and, of course, the mobile experience has been investing significantly. We have a combination of what's happening on the site, the shipping experience. We've improved in-store pickup so it's an all-out effort cumulative impact of the investments and improvements we've been making over the last three years,” he said.
And Joly emphasized that the online and store integration has been key. “[A] shopping journey [that] starts online may then be completed online or in the stores. There is a journey to the store if you're going to buy a 4K TV—the only way to see the quality of the picture and ask questions is really in the store but [a] better transaction may be completed in the store or online.”
The ship-to-store initiative specifically was spearheaded by McCollam, who emphasized the importance of integration.
“We have rationalized the portfolio and continue to do so. The stores are also really working hard on a concept we talked about for a long time, which is that our value add in the stores have a critical role in the growth not only of our store channel but the e-commerce channel,” she said. “From a portfolio standpoint, our store portfolio is extremely strategic and we will continue to rationalize it, but quite frankly, it just continues to lift its performance, and that's great news.”
McCollam will officially step down on June 14, 2016.
