Best Buy, the electronics retailing giant, has been hit hard by the broad trend against big-box retailing. Even the departure of Circuit City from the scene hasn’t helped stabilize the firm, which instead has seen itself steadily dragged down by the poor performance of the whole sector. Now in comes Richard Schulze, the founder of the firm, with an offer letter saying he’s prepared to take the firm private with a mix of debt, private-equity investment, and his own still-substantial stake in the company.
What he’s offering is a meaningful premium over where the share price was before he made the offer but still low compared to where Best Buy was trading as recently as March. And it’s not even clear he can really put the financing for this together. But as an observer from the outside, I hope it works. It’s pretty clear that Best Buy needs to try something new—see Farhad Manjoo’s ideas—and some kind of dramatic change in ownership could be the best way of giving that a chance to happen. Even so, other recent shakeups in retail ranging from the amalgamation of Sears and K-Mart to J.C. Penny hiring Ron Johnson away from Apple haven’t exactly born tons of fruit. Even Amazon, which obviously doesn’t have some of the structural problems afflicting other retailers, has razor-thin profit margins.