New Best Buy CFO's goal is "transformation of decade"

NEW YORK Mon Nov 12, 2012 6:24pm EST

A building is reflected in the glass of a Best Buy store in New York August 21, 2012. REUTERS/Brendan McDermid

A building is reflected in the glass of a Best Buy store in New York August 21, 2012.

Credit: Reuters/Brendan McDermid

NEW YORK (Reuters) - For former Williams-Sonoma finance chief Sharon McCollam, coming out of retirement to take the same job at struggling retailer Best Buy was not a tough decision.

The challenge of pulling off "the transformation of the decade in retail" pushed McCollam, 50, to return to the corporate battlefield, she said in an interview on Monday.

Investors welcomed the appointment of the seasoned retail executive, sending shares of Best Buy (BBY.N) up by 4.2 percent to $15.94 on Monday.

"I know that the company is going to reinvent itself and I came out of retirement because I believe that this is going to be one of the most exciting and important, beautiful transformations that you will see today," she said.

McCollam, who is well regarded on Wall Street, said retail is in her DNA. She has her job cut out for her.

Best Buy Co Inc, the world's largest consumer electronics chain, has posted same-store sales declines in eight of the last nine quarters.

Critics argue that its stores are hurting because they've become showrooms for Amazon.com Inc (AMZN.O) and other online chains as shoppers check out electronics like high-definition TVs, then buy them elsewhere for less.

McCollam argues that the threat of showrooming is overstated, echoing Best Buy Chief Executive Hubert Joly, who joined the company in September.

"I do not believe that people fall in love with websites," McCollam said. "When you try to create affinity with a customer, no doubt you will be more successful with bricks and clicks than you will ever be with just clicks."

During her tenure at Williams-Sonoma Inc (WSM.N), McCollam was instrumental in launching multiple e-commerce websites and new brands, revamping its supply chain and laying the foundation for international expansion.

"We believe McCollam's hiring is a major coup for Best Buy," BB&T Capital Markets analyst Anthony Chukumba wrote. "She is experienced in shrinking a retail store base and developing a higher-margin e-commerce distribution channel, two of Best Buy's most pressing needs."

When asked if she planned any immediate cuts in Best Buy's already-decreased number of stores, McCollam said it was too early to tell.

In late June, the company said it was looking to reduce the size of stores and close more stores beyond the previously announced plan to close 50 of its 1,100 large U.S. stores. When it announced those closings in March, investors said the plan was inadequate.

Chains should "optimize their square footage" to provide good service, make sure "the stores continue to be billboards for the brand," then use their "online capabilities to be able to serve that customer 24/7," she said.

Despite a thumbs-up on the appointment, Chukumba did not change his "hold" rating on the stock, citing a lack of visibility on the chain's near-term prospects and new senior management's turnaround plan.

Best Buy executives are due to meet investors and analysts on Tuesday in New York.

McCollam hopes to capitalize on Best Buy's business of giving product technical support to customers, and take advantage of the highly fragmented consumer electronics market. About half of the market is currently being served by competitors that each have less than a 4 percent share while Best Buy has a 16 percent market share, she said.

"When you add that to the fact that Best Buy has one of the largest customer house files (customer database) in retail today, we are not leveraging that as fully as we could," McCollam said.

McCollam will take over as the Minneapolis-based chain's chief financial officer, effective December 10, replacing Jim Muehlbauer, who is due to depart at the end of the fiscal year in early February.

She left San Francisco-based Williams-Sonoma earlier this year after holding various jobs at the chain for more than 12 years.

She is also excited about moving back to the Midwest, where she grew up.

"You cannot know how excited my husband and I are to be returning," she said.

(Reporting by Dhanya Skariachan; Editing by Jeffrey Benkoe)