New Best Buy CEO sets long-term margin targets

RICHFIELD, Minn., Tue Nov 13, 2012 – Best Buy Co. Inc. is targeting an operating margin of 5 to 6 percent over time, the company said on Tuesday as its new chief executive unveiled his plans to turn the electronics retailer around.

In a statement ahead of an investor meeting, the company said its short-term goal will be “to stabilize and then begin increasing its comparable store sales and operating margin.” Over time, it is aiming for a return on invested capital of 13 to 15 percent in addition to the margin targets.

Best Buy also said it would pursue a number of priorities, including a plan to “optimize its store footprint on an ongoing basis,” which suggested the company may look at ways to shrink or close stores, as some other big-box retailers have done.

The new CEO, Hubert Joly, said in the statement that while the company had its strengths, it also had been too slow to grow online and suffered from the perception that its prices were too high compared with peers.

Best Buy shares were down 1.2 percent at $15.66 on Tuesday afternoon.