Here is your Daily Digest for Tuesday, May 22:
Interim Best Buy CEO strikes different tone
Best Buy’s interim CEO made a blunt assessment of his companies place in the market Tuesday, telling Wall Street analysts “we aren’t even close to good enough.”
Chief Executive Mike Mikan acknowledged the electronic retailer’s failure to keep up with a drastically changed market and promised bold action to turn it around, the Wall Street Journal said.
Mikan said Best Buy is creating a new long-term plan than will feature a lot less square footage and will focus more on services and less on selling hardware. He described the initiatives unveiled before the abrupt departure of former Chief Executive Brian Dunn “just the first phase of the changes to come.”
The changes would be bold, include tough decisions and would accept “no sacred cows” when it came to a hard look at the business model, Mikan said, who has struck a different tone than previous CEOs, the Pioneer Press said.
But analysts were wary that a temporary leader like Milan could develop, affirm and institute a long-range plan before Best Buy has a permanent CEO, the Press said.
Best Buy said it will take six to nine months to get a permanent CEO in place, but Mikan said he doesn’t think his interim status is a hindrance to implementing big changes.
“When asked to take this role on, the board authorized this management team including myself to take action,” he said.
Though he did not reveal any specific information about initiatives yet to come, Mikan said the blueprint is to make Best Buy more relevant, more intelligent and more nimble.
As an example, he mentioned worker training to deepen customer relationships.
Best Buy will also shrink its physical footprint and reduce its cost structure, the Journal said.
Mikan, a former health-care executive who has served on Best Buy’s board since 2008, became interim CEO in April when Dunn resigned after being involved in a relationship with a 29-year-old female employee and company founder Richard Schulze said he’ll step down as chairman of the board.
The new plan comes during the release of the Richfield-based retailer’s first quarter earnings, which were down 37 percent. Sales rose 2 percent to $11.6 billion, but the decline of same-store sales by 5 percent suggested a different story, the Press said. Sales at existing stores in the United States fell 3.7 percent.
General Mills to cut 850 jobs, half in the Twin Cities
General Mills will get rid of 425 jobs in the Twin Cities and 850 in total in an attempt to cut costs and boost productivity, the company announced Tuesday.
The majority of General Mills employees in the Twin Cities work at the Golden Valley campus, where the company is based, the Star Tribune said. Company spokeswoman Kristie Foster said that “administrative and support” positions would be most affected by the layoffs.
The downsizing will cost the company $109 million in pretax restructuring charges, the Los Angeles Times said. Of that, $94 million will be recorded in the fourth quarter, which ends May 27.
Savings from restructuring actions will be reinvested to support the company’s future growth strategies and to accelerate innovation across General Mills global business platforms, the company said.
Foster said the company will not detail its plans further until after the earnings are released in late June.
Like many packaged food makers, General Mills has struggled with high commodity costs and weaker sales growth, the Tribune said.
“(Packaged food) is a tough space,” said Jack Russo, a stock analyst with Edward Jones. “You just have to grind your way through it and unfortunately you have to attack the cost side of the business.”
Yoplait, the leading U.S. yogurt brand and one of the company’s largest divisions, has particularly suffered from the rise of Greek-style yogurt and was late getting into the market.
However, the company’s snack bar business has been posting strong growth and other major categories, including cereal, have been holding steady, Russo said.
Plane diverted to Maine for “security issue”
A US Airways flight from Paris to North Carolina was diverted to Maine because a French passenger exhibited suspicious behavior, an official said.
The official said a woman is in custody and the flight was cleared to continue. Another official said the passenger appeared to be mentally unstable and that she announced she had a surgically implanted device, The Associated Press said. Both sources spoke on condition of anonymity because it involved sensitive law enforcement information.
Concern was raised after the passenger passed a note to a flight attendant, but the investigation indicates she “never posed a threat,” Fox News said.
US Airways spokesman Andrew Christie said the Boeing 767 with 179 passengers and nine crew members landed around noon at Bangor International Airport due to a “security issue.”
The plane was met by state, local and federal law enforcement officers in Bangor, FBI spokesman Greg Comcowich said.
A North American Aerospace Defense Command spokesman said two F-15 fighters were scrambled to escort the plane.
The Bangor airport is the first large U.S. airport for incoming European flights and last U.S. airport for outgoing flights, USA Today said. Aircraft use the airport when there are mechanical problems, medical emergencies or unruly passengers.
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