Best Buy founder joins the exodus
Richard Schulze, who started the company as a music store in 1966, is stepping down as the chairman.
Founder Richard Schulze has resigned as chairman after getting pulled into the company probe of the inappropriate actions of its former CEO.
The company dinged Schulze for not telling the board about former CEO Brian Dunn's romantic relationship with a 29-year-old female employee. Dunn is married with children. According to the company investigation, Schulze learned about the affair in December when he received a written statement from another employee with information.
Schulze showed the statement to Dunn, who denied the affair. Schulze didn't take the matter any further and didn't tell the board, which the company said was wrong. The board would learn about the affair in March from the human resources department. Dunn resigned on April 10 and is getting a $6.6 million severance package out of the deal.
It's a sad ending for Schulze, who will now get the honorary title of chairman emeritus. He founded the company in 1966 as a music store called The Sound of Music. He reinvented the company in the early 1980s, renamed it Best Buy and turned it into an electronics giant. He was the CEO until he resigned from that post in 2002 to become the chairman.
Now that Schulze is out as chairman, nearly all of Best Buy's ties to its past are gone.
"This is a big deal," David Strasser, a Janney Capital analyst, wrote in a note to clients, according to Forbes. "This makes the decision about who the new CEO is even more critical to the company. Now there will be no 'Old School' decision makers in charge."
In other words, the next CEO will have a lot of power and control and will be able to overhaul strategy and direction.
Best Buy has seen a number of top executives leave recently. In addition to Dunn, the company has lost its chief marketing officer and the founder of the Geek Squad.
Where can Best Buy go from here? The big-box model it made its name on doesn't work today. Best Buy basically became a showroom for Amazon (AMZN) and other online retailers. The company's recent strategy under Dunn was to scale down and open smaller stores with a mobile focus, a strategy that seems to be backfiring for RadioShack (RSH).
Does Best Buy have a future at this point?
I almost always found Best Buy to be a good place to shop. The staff, sometimes admittedly a little hard to find, was helpful, knowledgeable and competent and the prices were reasonably competitive. I am not so fond of buying electronics on the internet - I like to see what I am getting and maybe try it out, if possible. I like to go to a store, and not buy everything on the internet, although the internet is surely a great shopping resource (and putting many people out of work).
I hope that Best Buy can remain profitable and continue to operate in this tough business environment.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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