Best Buy founder-chairman resigns, may sell his shares
NEW YORK — The founder and outgoing chairman of Best Buy announced his resignation from the board on Thursday and said he might sell his 20.1 percent stake in the beleaguered electronics retailer.
His resignation is the latest news to hit the Minneapolis company that has increasing competition from online retailers and a CEO scandal and removes one obstacle for a possible private-equity takeover of the company. Shares fell nearly 8 percent in morning trading.
Richard Schulze, 71, has been with the company since its inception in 1966 and it its largest shareholder by far. The second-largest holder, Fidelity Management & Research Co., has a 6.9 percent stake in the company.
“There is an urgent need for Best Buy to reinvigorate growth by reconnecting with today’s customers and building pathways to the next generation of consumers,” Schulze said in a statement. “Accordingly, I have shared my views with the Board and today informed them of my decision to resign as chairman and a director, effective immediately, in order to explore all available options for my ownership stake.”
He initially announced in May that he would step down on June 21 at the company’s annual meeting after an investigation found that he knew that then-CEO Brian Dunn was having an inappropriate relationship with a female staffer. At the time, Schulze said he would remain as chairman until after Best Buy’s annual meeting on June 21 and as a director through the 2013 annual meeting.
Best Buy said Hatim A. Tyabji, chairman of the audit committee, will replace Schulze as chairman immediately, rather than after the annual meeting.
“Schulze is an iconic entrepreneur, and the board offers its deep appreciation for his enormous contributions and service as Best Buy’s founder and chairman,” the board said in a statement.
Schulze’s willingness to sell its stake removes a major obstacle should any private investment company seek a bid for the company, said Morningstar analyst R.J. Hottovy.
“The fact that Schulze is open to exploring alternatives makes Best Buy a more feasible takeover target,” Hottovy said.
The company is seeking a new CEO — a process expected to last six to nine months; therefore, a sale might not be the right time to seek out a bid.
“I think they’d prefer to remain public and independent at this point,” Hottovy said.
Best Buy has increasing competition from Internet retailers and discount stores as the so-called “big box” model of retail becomes outmoded. The company is trying to combat the so-called “show-rooming” of its stores — when people browse at Best Buy but purchase electronics goods elsewhere.
Best Buy has been shrinking store size and focusing on its more-profitable products, such as mobile phones. In April, it announced a major restructuring that includes closing 50 stores, cutting 400 corporate jobs and trimming $800 million in costs. No stores in the Pittsburgh region are affected.