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Richard Schulze  (Source: nypost.com)
Schulze has been mulling over several options including going private and selling his 20 percent stake in the company

Best Buy has been in hot water for awhile now due to its inability to compete with Internet retailers, and the company's founder is looking to take Best Buy private with the help of former executives. 
 
Richard Schulze, founder of Best Buy, is currently looking to bring former Best Buy executives onboard to help him take the company private. He hasn't reached any agreements with anyone so far, but he is in talks with two people in particular: former Chief Executive Officer Brad Anderson and Senior Vice President of Enterprise Capabilities J.D. Wilson, whose position is being eliminated. 
 
Schulze has been considering taking the company private after stepping down as chairman of the board back in June. Schulze resigned after an internal investigation discovered that he had withheld information about former CEO Brian Dunn's relationship with a female employee from the board. 
 
Ever since, Schulze has been mulling over several options including going private and selling his 20 percent stake in the company. 
 
However, analysts say going private won't be so easy. About $1-$2 billion would need to be raised from a private-equity firm and another $7-$8 billion in debt would need to be raised. It would be difficult to get investors to sell when a takeover would cost about $30 per share, giving it a value of $11 billion.
 
Best Buy has has problems ever since Internet retailers like Amazon hit the scene, offering cheaper prices for the same items and low shipping costs. Amazon, at the time, wasn't collecting taxes in very many states either (however, the company recently agreed to collect sales tax in more states in exchange for more distribution centers -- ultimately allowing same-day shipping rates for customers, which could potentially hurt Best Buy even more). 
 
Best Buy was forced to close 50 of its stores back in March/April. With store closings came lay-offs of 400 corporate and support jobs at that time, and then another 2,400 jobs were axed earlier this month. Things aren't looking so hot for the brick-and-mortar retailer, and Schulze is looking to act fast. 
 

Sources: The Wall Street Journal, Bloomberg



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Doesn't Add Up
By Reclaimer77 on 7/31/2012 6:25:48 PM , Rating: 2
Best Buy had steady profits and a health stock value FAR after Amazon and other online retailers became established and were raking in the money.

Then, suddenly, Best Buy lost half it's value over a two year period!

It just doesn't add up to me that Amazon and others are mainly to blame for Best Buy's downfall.




RE: Doesn't Add Up
By Mathos on 7/31/2012 7:00:30 PM , Rating: 3
Neh, e-tailer sales have been whittling away at Best Buy for a long time. It just didn't make news until they started taking big hits and going deeper in the red. Once circuit city fell it was pretty much inevitable that Best buy would be next.

And I think the best thing for the company would be for it to go back to being a privately owned company. Especially with the way the stock market has been. The potential is there for them to be a major player, even on the e-tailer stage. They could make a killing on the same day delivery thing by converting some of their poorer performing stores to shipping centers for online orders. Which would mean they'd have a very local pickup or shipping center for almost anyone. In fact if they wanted to, they could likely convert some of their regular employee's to delivery people for local orders.

Unfortunately idea's like that would never happen in a publicly traded company due to outside shareholder interference, or trying to change the CEO every time they didn't get what they want.


RE: Doesn't Add Up
By integr8d on 7/31/2012 9:22:36 PM , Rating: 2
Local pickup reminds me of Service Merchandise. That store kept little stock up-front. Instead, you'd take a ticket, from the item on display, then pay and receive your item. IMO, it would be more efficient to use more floorspace for stock than display. Let people shop online and then pick up at the store or have local, same-day delivery.

Right now, BB is just the place to go to look at something, before you go home and order it online.


RE: Doesn't Add Up
By Solandri on 7/31/2012 9:27:08 PM , Rating: 2
Ha. Best Products used to do that too. Lots of display items, write down the product number on a piece of paper (paper and pencils scattered throughout the store), and when you bought it they'd cart it out of their warehouse to the pickup area. I agree with you that this business model seems to make sense. But Best went bankrupt, and Service Merchandise closed their retail stores, which would seem to indicate it doesn't work that well in practice.


RE: Doesn't Add Up
By HOOfan 1 on 8/1/2012 10:06:14 AM , Rating: 2
Best Products went bankrupt for one of the same reasons Circuit City did, they got out of markets like Appliances which they were making a killing in and specialized in dead end markets.


RE: Doesn't Add Up
By PitViper007 on 8/1/2012 9:26:23 AM , Rating: 2
I thought of Service Merchandise as well when I thought of the local pickup. Was a great model I thought. Go into the store, browse around for what you want, take the ticket of what you want to the register, pay for it then go to the receiving area to collect your purchase. That type of model should be EASILY converted to a web-based system as the browsing and paying can all be done online. Then you either go to the store with your receipt or have it delivered to you.


RE: Doesn't Add Up
By shmmy on 7/31/2012 7:07:04 PM , Rating: 2
They had a failed project called Buy Back that they spent a ton of money on hyping it up, and what had to be a very expensive commercial during the super bowl with Ozzy and Justin Beiber (idk and idc how to spell his name)

Another thing is the canceled venture into England. Once blood is in the water stock value has little to do with net earnings and more to do with investor\public opinion.

Look at Fords stock value. Last time I check it was under 10$ down from 18$ about 2 years ago. Even though they have had good sales for the past 2 years. Investors said it was not a good buy and the stock went down, even though sales are fine.


RE: Doesn't Add Up
By Reclaimer77 on 7/31/2012 7:10:55 PM , Rating: 2
That's what I figured, they just made a bunch of bad decisions somewhere. Competition is one thing, but for a large company to lose half it's value in two years, something else must have been going on.

Thanks, I forgot about "Buy Back", heh.


RE: Doesn't Add Up
By LieutenantCrunch on 7/31/2012 7:35:49 PM , Rating: 2
Buy Back was a horrible choice for consumers, the ROI was not nearly enough to make it cost effective for the consumer, more often than not they'd be able to sell the product on eBay or Craiglist and make back a much larger portion of their cost. . . hell even giving it away to a family member or donating it would probably have been a better option, at least then you'd have a warm fuzzy feeling.


RE: Doesn't Add Up
By Ringold on 8/1/2012 11:27:59 AM , Rating: 2
quote:
Investors said it was not a good buy and the stock went down, even though sales are fine.


Ford never got to really renegotiate their labor contracts like GM and Chrysler were, or restructure debt, so Ford has to work that much harder and get better sales just to tread water. When taking in to account their long-term liabilities, it makes more sense; there could be a day of reckoning coming, and common shareholders could get taken out when it hits.

quote:
a very expensive commercial during the super bowl with Ozzy and Justin Beiber


Any company that supports Justin Beiber deserves to fail and spent eternity in the communist ring of hell (that was in Dante's Inferno, wasn't it?).


RE: Doesn't Add Up
By BSMonitor on 8/1/2012 9:57:58 AM , Rating: 2
It's not Amazon. When you walk into BB what do you see??

CDs. Lots of them. How much does a CD "cost" to manufacture, not much. How much did they sell them for?? $12-18. Remember the CD stores in the mall?? Where are most of them, now??

Music was a bread and butter for these places. BB doesn't margin in quantity on its other products the way it used to in music, movies, video games. Red Box, Netflix, iTunes, Pandora, Cable and Direct TV onDemand, then your Amazon and newEgg, XBox Live etc.. AT&T, Sprint and VW stores selling exactly the same phones at exactly the same price.

As consumers become more and more techy, B&M that used to abuse tech ignorance will start to fail. BB simply was doing better at the time than Circuit City, otherwise it would have fallen just the same.

Oh there is still tech ignorance out there, it just doesn't buy CDs and DVD's in bulk any more.


RE: Doesn't Add Up
By Mathos on 8/1/2012 10:55:39 AM , Rating: 2
Yeah the other side of the equation with BB, and the others that people have mentioned using the store pick up model. Is they all use a huge retail mark up. Only way to get around it, is work for em, when I did you get 15% or 5% above cost, whichever was better. Cold hard reality is, they need to lower prices, to compete with some Etailers and other lower margin stores like wal-mart.


TVs are what are killing Best Buy
By happyfirst on 7/31/2012 7:36:34 PM , Rating: 2
SamsClub, Costco, have really seriously branched out into offering flat panels. And their return policies are more relaxed. It feels like everybody I talk to (including me) buys their tvs at one of the two. Everytime I'm at one of them, I usually see a few tvs in the checkout lanes.

And the last time I walked into a best buy to get a tv was a long time ago, and it was a frustrating experience. I wanted to get a new LED flat panel and the salesgirl wouldn't shut up about plasma this, plasma that, and that I needed to walk into the front room (aka most expensive stuff) for the good stuff. Maybe if they actually tried to sell me WHAT I WANTED, they might have made a sale.

Now, best buy's specialty is just pushing extended warranties and bundling junk with notebook computers to drive up the price even more.




RE: TVs are what are killing Best Buy
By Solandri on 7/31/2012 9:22:54 PM , Rating: 1
quote:
And the last time I walked into a best buy to get a tv was a long time ago, and it was a frustrating experience. I wanted to get a new LED flat panel and the salesgirl wouldn't shut up about plasma this, plasma that, and that I needed to walk into the front room (aka most expensive stuff) for the good stuff. Maybe if they actually tried to sell me WHAT I WANTED, they might have made a sale.

Whoa, a salesperson who actually knew what they were talking about? If you can get over the drawbacks of plasma (burn-in, additional weight and power draw, a faint buzz, and wide angle of view which is actually an advantage but becomes a disadvantage if you compare brightness head-on), it's better than LED/LCD in pretty much every way.

On one level I agree with you that salespeople should show you what you want. But on another level I think they also have a duty to make recommendations if they feel they know the products better than you do. LED/LCD vs. Plasma is currently biased against plasma due to the narrower angle of view on LCDs concentrating light when viewed head on, making them look insanely bright (compounded by display models being set to max brightness). So I think she did the right thing trying to get you to consider plasma. But you're right, once you were insistent on getting LED she should've dropped it and steered you to the LEDs.


By Fujikoma on 7/31/2012 10:43:47 PM , Rating: 2
Please,
It's easier to find a one legged ballerina than it is to find a knowledgable Best Buy employee. I can't stand the constant commercial drone about how good a product is when they've never even asked what I'm going to use it for (such as picking up laptops for family). The first questions out of their mouths should be, 'what are you looking for it to do?' followed by, 'are you willing to overlook certain features to hit the price you want?'.
They need to lay off up-selling expensive warranties that usually overlap with manufacturer's warranties. They need to stop trying to sell a lot of expensive cables to go with equipment (and be more honest about how much 'better' Monster products are). I particularly enjoy the 'can I help you pick out a movie' types who start making recommendations without even discussing films to begin with.
I'd also think they should carry a better selection, or at least allow stuff to be ordered and picked up without charging me for shipping/handling.
I only shop their for bargain bin movies and to price shop, because family always asks for stuff to be fixed after I show up for a holiday visit. My fiancee has finally realized that shopping online is vastly cheaper for her cell phone accessory habit.


By Rukkian on 8/1/2012 12:09:28 PM , Rating: 2
While Plasma may be okay for some, the drawbacks you listed are pretty big. While buy a plasma, when any potential savings go out the window with energy bills.

On top of what you listed, the other big drawback is glare - you really need a dark room to not have glare from a plasma. While our basement is okay for this, many locations have windows, and that is an issue.

This should not have moved to a conversation about what is better, it is about not recommending crap that they get a bigger commission for and being knowlegable. To recommend a certain piece of electronics without knowing the use case, budget, and expected features is just wasting time.

BB lost a lot of credability for me many years ago after one of the many times going in and getting pushy idiot salesmen that try to just upsale on products they have no knowledge of. In this case, I was in there with a co-worker for something for work, but she wanted to look at tv's for home. They had 1080p sets next to some 1080I and 720P sets (a few years ago). She was looking at a 50" 1080p lcd, and "expert" tried telling her she should get the samsung next to it, because it had a higher resolution (even though it was 720P), which of course cost more. I told him that 1080 was a higher resolution, and he told me that the number had nothing to do with resolution, and that I should do some research.

These stories (we all have them) are why it is failing. Why go somewhere like this to have pushy idiots trying to pawn their crap of the month on us for no reason. I still like to go there once in awhile to browse, but usually just to figure out what I may want to buy online. I feel sorry for the suckers that actually go in and think the employees know what they are talking about and that they need the 100$ monster HDMI 3' cable, cause it works so much better.


By jskirwin on 7/31/2012 11:34:00 PM , Rating: 2
I walked into a Best Buy for the first time in 3 years. During that time I have bought gear from Amazon, Newegg, eBay as well as bricks & mortar Staples and Walmart. I gave up on BB after the company complained about the thriftiness of customers, the "devil customer" spat of a few years back.

The place was weird, and more of a nostalgia trip than anything. It was mostly empty even on a Saturday afternoon. All the workers were walking around with clip boards, accosting people (for what purpose) so I did my best to avoid them. Things hadn't changed much at all. Prices were still higher than other places, selection was tiny - especially compared to online retailers. Knowledgeable staff? Forget it.

I left without buying anything and doubt I'll be back. Why? There's simply no reason to shop there.




BestBuy sucks at online selling
By Conficio on 8/1/2012 4:32:20 AM , Rating: 2
I'm not surprised that BestBuy sucks at online selling. They can't even get their HTML valid. http://blog.conficio.com/blog/2012/03/16/is-valid-...

Invalid HTML makes it hard for any external entity (i.e. search engine) to read your content and make a proper judgement about it. That means you have to pay top dollars for advertisement, rather than let the searcher find you naturally.

In addition the HTML code is riddled with bloat comments and tracking data.




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