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Gunfight At The Best Buy Corral

08/07/2012

Things suddenly got real interesting at the massive headquarters of Best Buy in suburban Minneapolis.

Richard Schulze, Best Buy founder and former board chair, who happens owns nearly 22 percent of the company’s stock – equalling a bit over 7 percent of Best Buy made the other shareholders an offer yesterday. Schulze, who resigned hastily a few months ago, wants the company he started back. And he’s willing to pay $26 a share to do it. The current trading price is $19.99. The stock has traded above the mid-thirties since 2009.

If investors accept Schulze’s offer they are betting that the current management team is incapable of turning around the teetering company. As an outsider I’d have to say that’s a safe bet.

And if Schulze’s offer is accepted investors are giving a vote of confidence to the founder’s ability to right the ship.

Schulze’s job, should he regain control of Best Buy, is no small task. The company is heavily invested in the big box retail format, has been caught flat-footed in online sales by the likes of Amazon, was seemingly blindsided by new competition in TV’s by Target and Walmart and appears to not have a firm grip on how to leverage the Geek Squad service franchise the company owns. Other than that Richard Schulze can run Best Buy readily.

If Schulze wants his company back he should get it. There’s nothing in the current management to suggest they’ve got a magic wand.

For Schulze to turnaround Best Buy he must think outside the big box. Schulze is a store guy…through and through. He knows bricks and mortar retail extremely well. Unfortunately in today’s retail environment business is anything but usual. Omni-channel, mCommerce, eCommerce, showrooming, mobile price checking, social shopping and do not discount social media – all have changed the retail playing field. As I tell my clients, “Use technology to sell technology”.

Former CEO Brad Anderson has agreed to come out of retirement to aid Schulze. This is important as the company flourished under Anderson’s leadership. While they have a daunting task, the Schulze and Anderson team is possibly the only real hope Best Buy has. The current interim CEO is a bean counter from the health care sector. Rarely does a retail firm succeed with a non-merchant at the helm.

Whatever happens over the next few weeks it will undoubtedly be interesting. But keep your head down as bullets will be flying…Sheriff Schulze is back in town.

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