UPDATE, 9:10 AM: Best Buy founder Richard Schulze says in an SEC filing that the company rejected an offer that he made with support from “up to three leading private equity firms.” Although his effort might have helped to return the chain “to its position of market leadership,” he now believes Best Buy “deserves a chance to implement its own plan.” The owner of about 20% of the company’s stock “has not made any determination” about whether he will exercise his right to appoint two candidates to the board. “No one is more interested in the success of the Company than Mr. Schulze,” the filing says.
PREVIOUS, 6:39 AM: The stock is up 2.8% in early trading as investors adjust to the likelihood that Best Buy will continue to operate as a publicly traded company. The chain confirmed this morning that founder Richard Schulze did not submit a bid by the February 28 deadline. As a result it “will continue to focus on its transformation for the benefit of all its shareholders.” Best Buy’s earnings for the quarter that ended on February 2 apparently compensated for any disappointment, The company reported a net loss of $409M, an improvement from the $1.8B loss a year ago, on revenues of $16.7B, +0.2%. The top line beat analysts’ expectations for $16.3B. And adjusted earnings from continuing operations, at $1.64 a share, topped forecasts for $1.54. Best Buy says that domestic revenues, at $12.6B, fell 0.3%. The closing of 49 big box stores was “substantially offset” by a 0.9% growth in same-store sales as well as the addition of 129 Best Buy Mobile stand-alone stores. Domestic online sales were up 11.2% to $1.3B. Demand for mobile phones, tablets and e-readers and appliances exceeded the drop in sales for game consoles and digital cameras. Sales of DVDs and other entertainment continued to decline; they accounted for 12% of domestic revenues, down from 15% a year ago. On a same-store basis, entertainment sales declined 18.9%. CEO Hubert Joly says that the company is now in “a year of transition” where it will focus on boosting online sales and making its stores more efficient. Earlier this week the chain said that it plans to lay off about 400 people at its headquarters tied to an effort to cut expenses by about $150M.
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