The crowd of Best Buy employees slowly made their way to the front of the store. It was a motley group: teenagers, middle aged men, women, Blue Shirts, Geek Squad, short, tall, rookies, veterans.
It was 11:30 p.m., just an half hour before D-Day. Or in retail parlance, Black Friday.
The vanguard of the more than 300 people waiting outside pressed their faces against the door.
"The crowd is so close the door, it's making me nervous," one store manager observed.
The employees started to clap. Louder, louder, and louder.
Up to the front strolled Mike Ersfeld, the store's general manager. He is technically 31-years old but he looks more like 20. It's Ersfeld's second Black Friday managing a Best Buy store but his 11th overall Black Friday.
"Are you ready to rock this thing?" Ersfeld asked.
The crowd roared its approval.
"A lot of prep works goes into this day," he said. "But I can't think of time when we were more prepared than we are today."
"It comes down to you guys," Ersfeld continued. "To simplify things, just pick one thing that you're best at, and then be the best at it."
Around midnight, the first customers streamed into the store.
"Welcome to Best Buy," Ersfeld said. "Happy Thanksgiving. Thanks for waiting."
Hi everyone. Happy Thanksgiving. By now, most of you are starting (or maybe finishing) Thanksgiving dinner. After that, it's time (for better or for worse) to hit the stores for Black Friday shopping.
I'll be speaking to Target CEO Gregg Steinhafel in Bloomington before Target opens its doors at 9 p.m. And then off to Best Buy in Eden Prairie at 10 p.m. to try something different this year. Best Buy doesn't open until midnight but I will be shadowing the store's manager to get a first hand look at how employees prep, manage, and survive the craziest shopping day of the year.
Stay tuned to this blog for the latest updates. If you don't see anything, send in the Marines. They might need to peel me off the wall once retailers open their doors.
Best Buy Co.'s much anticipated investor meeting in New York is back on.
The Richfield-based consumer electronics giant said CEO Hubert Joly will make his Wall Street debut on Tuesday, Nov. 13 at the Best Buy Theater on Broadway in Times Square.
Best Buy had to cancel its original meeting this past Thursday because of Hurricane Sandy.
For Target and Richfield-based Best Buy, doing business in the hurricane-swept Gulf Coast region this summer turned into an ongoing exercise in crisis management. The wind damage, flooding,looting and mass evacuations were just the start, with the aftermath of the storms proving every bit as challenging. From reopening damaged stores to finding displaced workers (or any worker), the events in Louisiana and Mississippi will serve as the ultimate case study on how retailers can cope with natural disasters, company executives say.
I wrote the above story in October 2005 from New Orleans after Hurricane Katrina swept through the Gulf Coast. Now, almost exactly seven years later, I could simply cut and paste the paragraph and replace Gulf Coast with Mid-Atlantic and Louisiana and Mississippi with New York and New Jersey.
Just as Hurricane Katrina knocked retailers off balance so did Hurricane Sandy as the powerful storm swept through the Mid Atlantic region. Both hurricanes caused massive flooding that forced retailers and other businesses to rewrite their natural disaster response plans: store damage, curfews, employee communications, blackouts, mass evacuations, etc.
As of Wednesday, Target said all but three of the 200 stores the company shuttered on Monday are open. Ten other stores have reduced hours, mostly due to damaged lights in the parking lots.
“Our teams are working diligently to make contact with all team members,” Target spokeswoman Jessica Deede wrote in an e-mail. “Given the large number of stores impacted, we anticipate this process to take place over a few days.”
About 40 Target stores are still operating on backup generators. Many stores suffered damage to front doors and roofs, which are leaking water, Deede said.
As for Best Buy, spokeswoman Amy Von Walter said about 30 stores are still closed or opening at later hours.
Both spokeswomen declined to comment on the storm’s possible financial impact on Target and Best Buy’s fourth quarter performance.
Best Buy has canceled its investors meeting in New York on Thursday.
The Richfield-based consumer electronics giant had hoped CEO Hubert Joly could outline his strategy to Wall Street before founder Richard Schulze makes an expected $8 billion to $10 billion bid to purchase the company.
Hurricane Sandy has pretty much interrupted those plans: Lower Manhattan, including Wall street, is still pumping out water. The stock exchanges were closed Monday and Tuesday, which might be a good thing for Best Buy since its stock has free falled of late.
Best Buy still hopes to host the meeting. My guess is next week, since the deadline for Schulze's bid comes around Nov. 15.
As the clock ticks away on Best Buy founder Richard Schulze’s 60-day deadline to propose an offer to buy back the company, the debate rages on whether the billionaire can actually finance the deal.
In August, Schulze struck a confidentiality agreement with Best Buy that will allow “six equity financing sources” to view the company’s financial information. That doesn't’ mean six firms will actually fund the estimated $10 billion price tag, just that Schulze needs back up sources of money should one or more parties drop out.
Indeed, KKR (Krohlberg, Kravis, Roberts) has declined to move forward, according to a Wall Street source with close connections to the industry. That presumably leaves Leonard Green & Partners, Texas Pacific Group (TPG), and Apollo Global Management plus two unknown parties still in the running.
Of the remaining group, Leonard Green is the most likely to back Schulze, given its strong attachment, both financially and emotionally, to retail. The Los Angeles-based private equity firm, which has raised $15 billion since its debut in 1989, has invested in big name retailers like Neiman Marcus, Whole Foods, BJ Wholesale Club, Petco, and Rite-Aid.
An analyst with a hedge fund that owns Best Buy stock recently told the Star Tribune that he had spoken with a top official at Leonard Greene before Schulze publicly announced his takeover bid. The official said Leonard Green was not only highly interested in a bid but stated that “it was important that Best Buy survive,” the analyst said.
In any case, Schulze will probably have to pony up more money out of his own pocket beyond the 20 percent stake, worth over a $1 billion, in Best Buy he has already pledged toward a takeover.
So who are the other two parties bound to the confidentiality agreement? The Star Tribune previously reported that Schulze had previously spoken with Liberty Media, the media content company led by billionaire John Malone that owns the Starz cable channel.
The Wall Street source who told the Star Tribune about KKR’s departure, also said Schulze held “high level discussions” with the sovereign wealth fund of Qatar in the Middle East. But a source close to Schulze denied it.
Maybe so. But foreign money makes a whole of sense, especially if American private equity firms don’t want to roll the dice on Best Buy.
China, in particular, has been looking to park its cash in something that will generate a better return than U.S. Treasury bills. In July, China offered to pay $15 billion to acquire Canada’s Nexen oil company.
Indeed, Best Buy’s international assets, which includes stores in Europe, China, and Canada, could be the oil that greases Schulze’s takeover bid.
Despite some moderate successes, Best Buy International has never generated impressive returns, certainly nothing that approaches the United States, where the company produces about a four percent return on invested capital.
With its weak economy and perpetual Euro crisis, Europe has been a nightmare for Best Buy. But even sales in Canada and China, where Best Buy owns the successful Five Star local electronics chain, has slowed considerably in recent months.
Best Buy recently reported that international second quarter sales at stores open for at least a year fell a whopping 8.2 percent, “driven by the lower growth in consumer spending in China and the continued impact from the expiration of government sponsored programs, which negatively impacted sales in Five Star. Market softness in notebooks, digital imaging and home theater in Canada also contributed to the International comparable store sales decline.”
Even in a weak global environment, a sale of Best Buy’s assets in Europe and China alone could fetch nearly $1 billion, David Strasser, an analyst with Janney Capital Management, wrote in a recent research note.
Jettisoning Best Buy International to preserve Best Buy’s core U.S. business is a trade Schulze would be more than willing to make.
Even new Best Buy CEO Hubert Joly doesn't seem particularly attached to the retailer’s global business, a stark change from his predecessors: G. Mike Mikan and Brian Dunn. Both men had touted overseas expansion, especially in China, as a key part of the company’s long term growth prospects.
“One of the key strategic questions is what is the purpose of being global?,” Joly told the Star Tribune in recent interview. “Retailing is not necessarily a global business. Is being global or multinational a strategic advantage or is it just a collection of countries?”
“I am going to take my time to study this,” Joly continued. “I would be surprised if my primary focus won’t be on the U.S. business. It’s by far the biggest. We will, over time, take a look at international and what we will do with it.”