Best Buy (NYSE: BBY) founder Richard Schulze was shown the door of the company he started less than a year ago, but with a failed leveraged buyout attempt now behind him, he is returning to the firm he built in a newly established Chairman Emeritus position. Along with him, he is bringing back Brad Anderson, the former Chief Executive who led the firm during it’s golden age a decade ago.
Schulze spent the winter mulling a leveraged buyout of Best Buy after his unceremonious departure from the company in June. He later scrapped his plans, even though Best Buy showed signs of life in the fourth quarter. Schulze will now need to work with Best Buy’s new CEO, Hubert Joly. “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 revitalize Best Buy for the benefit of all stakeholders,” Schulze said in a statement. “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.”
Also returning to the firm is former executive Al Lenzmeier, who will sit on the Board. Schulze, Anderson and Lenzmeier return to a vastly different company than last they worked together. Today, Best Buy is a struggling giant and something of an anachronism. Its massive big-box stores have become showrooms for its digital competitors, like Amazon.com and eBay, and it has admitted that it faces confusion over its prices. (Customers consistently believe they’re higher than peers whether they are or not.) Other big retailers, such as Wal-Mart and Target, haven’t been as badly hurt by the transition to e-retail, but Best Buy stock has sank by 40% in three years.
Many question if the brick and mortar model of Best Buy can compete in the new digital marketplace. The tech retail giant is saddled with overhead and real estate costs not borne some of it’s online competitors, which have soured many investors on the firm. Time will tell if Schulze and his team can restore the firm to glory – it has a long path ahead of them, but staving off extinction alone will be a major win for the firm. The firm has been on the ropes for months, and must alter its path quickly.
