Tom Sweeney, Star Tribune
Former Best Buy executives officially rejoin board of directors
- Article by: Thomas Lee
- Star Tribune
- April 17, 2013 - 3:19 PM
Best Buy Co. Inc. on Tuesday seated its two newest directors who are far from new.
Former CEO Brad Anderson and former Vice Chairman and President Al Lenzmeier officially joined the Richfield-based retailer’s board. During a meeting Tuesday, the board inaugurated an era in which a new generation of leaders including CEO Hubert Joly attempts to coexist with Best Buy’s founding brain trust.
Analysts and former executives say the new board, which meets again Wednesday, faces a hefty to-do list: the fate of Best Buy’s international businesses, the progress of BestBuy.com, and perhaps most important, crafting a new long-term strategic vision for the company.
Directors will also need to establish chemistry with one another, not an easy task given the events that preceded these meetings.
Several directors last year forced founder Richard Schulze to step down as chairman after an investigation concluded he withheld information about the alleged misconduct of then-CEO Brian Dunn.
After failing to buy back the company, Schulze, who owns 20 percent of the company, enlisted Anderson and Lenzmeier to serve as his representatives on the board. As chairman emeritus, Schulze will act as an adviser to the company.
In addition, Anderson has his own tension with the board. In 2010, Anderson retired earlier than he wanted after clashing with some directors.
However, David Strasser, an analyst with Janney Capital Management, said he does not anticipate any problems — at least right now.
“Brad knows Hubert pretty well,” Strasser said. Anderson “is as much there to keep on an eye on what’s going on in there for Dick. Also, Dick has already bought into Hubert’s plan. There are not a lot of issues but that could change in about a year.”
That’s because Best Buy still faces a precarious situation. Though the company seems to have stabilized its core business, some investors wonder if Best Buy can consistently string together several quarters of growth in sales at stores open for at least a year.
A sudden downturn in Best Buy’s performance could pressure the nascent alliance between Schulze and Joly.
“Given its poor sales results, its latest ‘transformation’ scheme could be too little too late,” Carol Levenson director of research at Gimme Credit, wrote in a recent research note. “The presence of a new CEO heightens the uncertainty, as does the activist intentions of the chairman, founder, and largest shareholder, who could still have considerable influence, given his honorary chairman title, consulting arrangement, and two board [representatives].”
In the meantime, the board faces more immediate issues. Analysts predict Joly will pull Best Buy out of China and Europe. The board will need to decide how and when to divest its international business in a way that returns the greatest amount of cash back to the company, Strasser said.
Also, the board might try to help the company’s online efforts by acquiring smaller high-tech firms that could boost Best Buy’s e-commerce abilities.
“There’s a lot of technology out there,” Strasser said.
Thomas Lee • 612-673-4113
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