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Monica Wolfe
Monica Wolfe
Articles (757) 

Best Buy Founder Returns to His Company

March 25, 2013 | About:

Best Buy (BBY) is the world’s largest consumer electronics retailer with stores in the U.S., Canada, China, Europe and Mexico. The company also maintains its status as the 11th largest online retailer in the U.S. and Canada. But with online competition like Amazon (AMZN), the company has been stuck in a rut that it cannot seem to make its way out of. Best Buy has been in a five-year decline with an average rate of decline per year being -37.8%. In June 2012 Best Buy Founder (and largest shareholder), Richard Schulze, resigned from the board of directors in order to seek out the possibility of taking the suffering company private. During this time Best Buy named Hubert Joly as president and CEO, a decision Schulze was none too happy about.

“Hubert Joly is an accomplished executive,” said Best Buy Founder Richard Schulze in August 2012. “However, Best Buy continues to face enormous challenges and needs a clear plan and a proven leadership team with deep retail experience and knowledge of Best Buy to win back customers, inspire employees and reinvigorate its trusted brand.”

Despite the founder’s obvious dislike of him, CEO Joly initiated a corporate and morale renovation project called “Renew Blue”. This was clearly a good move because today Best Buy announced that Richard Schulze would be returning to the company as Chairman Emeritus in support of the company’s transformation project. Along with Schulze, two of his associates and former Best Buy executives, Brad Anderson and Al Lenzmeier, have been nominated to the board under an agreement between Schulze and the company.

In November 2012 the CEO outlined the transformations of “Renew Blue” and stated that he planned to remove $725 million in costs. As of February 2013, Joly has already eliminated $150 million in costs. And it seems that these improvements have Schulze singing a different tune about Hubert.

“Over the past several months, I have come to know and respect Hubert, and have a high regard for the work he and his executive team are doing to revitalized Best Buy for the benefit of all stakeholders,” said Schuze. “My dedication to the company that I founded and love is unwavering and, together with Hubert and the Board, I determined that the best way to support Best Buy would be to return in support of the initiatives underway.”

Since “Renew Blue” has been underway, share prices have increased from around $16 to around $22 per share.

Despite the company’s recent struggles it is still held by 11 gurus followed by GuruFocus.

With its prices up 2.72% this morning, Best Buy trades at $23.40.

Rating: 4.5/5 (6 votes)


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