Top Buy.com Execs Lost in Reshuffle
Chairman/CEO Gregory Hawkins and chief financial officer Mitch Hill quit their posts at buy.com in yet another turbulent episode of the online retail industry. The resignations came soon after the Aliso Viejo, CA, retailer reported fourth-quarter sales that were well below Wall Street estimates.
"The realities of the marketplace demand that we drive rigorously toward profitability," said James B. Roszak, a former Transamerica executive and director on the buy.com board, who has been named temporary CEO.
"We've [proved] our ability to attract customers and sell product. Now we need to prove we can make money," Roszak said.
Donald Kendall, former CEO of PepsiCo Inc. and another board director, has been appointed chairman. In addition, Robert Price has been named chief financial officer at buy.com, one of the retail discounters that sold many products at less than cost.
The company is now looking for a permanent CEO.
Sales this past fourth quarter at buy.com fell to $196.7 million, from $200.7 million in the same quarter in 1999. Wall Street analysts expected fourth-quarter 2000 sales of $220 million.
The retailer reported narrowed fourth-quarter losses, however. After including extraordinary costs in the quarter, buy.com posted a net loss of $36 million, compared with $49.6 million in the fourth quarter of 1999.
"The fourth quarter was an intensely competitive environment with general softness in the technology sector," Hawkins said in a conference call for analysts earlier this month.
In a recent move, the retailer has moved away from its low-price model in order to raise margins -- a move that it acknowledged would cost it much business in the year ahead.
Change in product strategy means that buy.com will now focus on core categories such as computers, software, wireless, clearance items and consumer electronics.
These products are more profitable to the company than entertainment-oriented sports, books and music -- items that had low margin and proportionately higher handling costs.
"Rob and I look forward to working with the management team to achieve profitability as soon as possible," Roszak said in another statement following the original announcement.
In a series of measures that reflect the new austerity, buy.com has sold its British operations to department store and supermarket owner John Lewis, shuttered its Canadian store and folded an Australian joint venture.