Shares of Best Buy (BBY) are trading modestly lower after the company announced that Chief Financial and Strategic Transformation Officer Corie Barry would become Chief Executive Officer starting in June. Outgoing CEO Hubert Joly will become Executive Chairman of the Board.
It's understandable that investors are a little disappointed with Hubert Joly's departure because he has done such a phenomenal job at Best Buy since taking over in 2012. Mr. Joly successfully instituted Renew Blue initiatives upon taking the reins, focused on improving the company's website and customer satisfaction, which resulted in better market share, sales, and margins.
Best Buy is one of the few retailers that has really improved its position in the sector as the shift toward online shopping reduced foot traffic at most brick and mortar retailers.
Fortunately for the company, consumers like to play with electronics in person before buying them. Management also cites technological innovation as a tailwind for the business. Still, Best Buy did the right thing standing its ground versus Amazon and big box discounters by remaining competitive on price while differentiating customer service and key supply partnerships. Execution has been key.
In 2017, Mr. Joly introduced Best Buy 2020: Building the New Blue. Last year, the company hit its 2021 revenue and adjusted profit targets two years ahead of schedule. The company has beat Wall Street's estimates on the top and bottom line for five consecutive quarters while posting positive comparable store sales eight quarters in a row.
However, Best Buy will remain in good hands. Corie Barrie has been Chief Strategic Officer for years and added the CFO role in 2016. As a result, investors have reason to expect a smooth transition and believe that the positive status quo will remain in place at Best Buy going forward.
Mike Mohan, current U.S. Chief Operating Officer, will be promoted to President and Chief Operating Officer. The company will conduct an internal and external search for a new CFO.
Best Buy shares trade at ~13x EPS and just under 7x EV/EBITDA, which is roughly in-line with a broad group of retailers. Share buybacks are boosting EPS but the stock also pays a healthy dividend, which yields 3.8% on an annual basis.