Best Buy CFO Sharon McCollam was happily retired after a successful run as the CFO at Williams-Sonoma.
In November 2012, at the request of new Best Buy CEO Hubert Joly, McCollam agreed to become the company’s new finance chief, despite a very public uphill battle to revive the struggling electronics retailer.
Almost immediately it was obvious that Joly’s ability to lure McCollam out of retirement was the right decision.
She immediately “implemented a rigorous budget; overhauled Best Buy’s IT, supply chain, and logistics; and even inspected stores with a ‘white glove’ dust test,” according to Fortune.
On Thanksgiving day 2014, just short of two years after she was hired, the company launched a successful Black Friday sale that helped increase same-store sales by 2.5%, the company’s highest increase in years — despite an electronics industry that was experiencing significant levels of contraction.
“This one thing will probably go down in my personal history book as one of the most meaningful things that I ever got to do,” McCollam told Fortune.
That’s an impressive statement from a CFO who had successfully served for years as the finance chief at Dole Fresh Vegetables and then led a massive turnaround at Williams-Sonoma. When she departed Williams-Sonoma, her influence over the company caused its shares to drop 6%.
According to Fortune, before she agreed to become Best Buy’s CFO, McCollam visited 75 stores to determine their worst problems. She discovered a company in complete disrepair, from its brick & mortar stores to its wonky website.
McCollam held nothing back. Not only did she cut underperforming stores, but private jets were sold, trips to the World Economic Forum in Davos were canceled, and Fortune notes that the company stopped advertising with NASCAR and during the Super Bowl.
Even the smallest of details were involved in McCollam’s plan. Colour printers were removed from the company’s corporate office, and Best Buy started making smaller shipping boxes to help cut down on excessive shipping fees for website orders. Those cuts appear to be working, the company “exceeded its cost-cutting goal of $US725 million, instead slashing $US765 million from its bottom line” in Q4 2014, according to Forbes.
During her tenure at Williams-Sonoma, Reuters says she was “instrumental in launching multiple e-commerce websites and new brands, revamping its supply chain and laying the foundation for international expansion.”
McCollam is also “well regarded widely for her role in scaling back Williams-Sonoma’s store base after over expanding before the recession,” The Wall Street Journal reports. Best Buy was in desperate need of a restructuring plan that involved store closures at the time of her hire.
As Best Buy continues to face off against a growing and increasingly aggressive Amazon.com, her experience in e-commerce shouldn’t be understated. As the CFO at Williams-Sonoma, McCollam focused largely on e-commerce. During her last year with the company, 38% of its revenue came from e-commerce, according to The Journal.
While she isn’t afraid of growth, McCollam also knows when it’s time to refocus a company’s efforts. Best Buy pulled out of China in late 2014 and sold its 50% stake in Best Buy Europe, consisting of 2,400 stores, to joint venture partner Carphone Warehouse for $US775 million.
“The company believes that its recent exit from some international markets will help it focus more on its core US business,” Yahoo Finance reports.
That focus can be seen in several important areas. Market Realist examined the company’s operations in January 2015 and found that Best Buy is more focused than ever in terms of closing underperforming stores, maximizing inventory levels, reorganising stores to make shopping more pleasurable, and expanding product selection.
With McCollam’s financial experience and Joly’s leadership skills, the company has expanded its store-inside-a-store model to include Samsung, Microsoft, Pacific Kitchen, and home-theatre provider, Magnolia Design Center.
The store within a store model allows the company to better assist customers with the help of highly trained product specialists who are solely focused on a single brand lineup.
Best Buy still has a long way to go, but there has been a marked improvement since Joly and McCollam began working together.
Three days before the company’s new CFO was hired on November 12, 2012, Best Buy shares were trading at $US15.30. As of today, shares are trading at $US34.79.
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