Shares of Best Buy
(NYSE:BBY), the beleaguered consumer electronics retailer, were on the rise Thursday despite media reports that founder Richard Schulze may scrap plans to take the chain private after failing to get financing. The deal had been valued as high as $11 billion.
According to the Wall Street Journal
, Schulze, Best Buy's largest shareholder, is now trying to persuade investors to take a minority interest in the Richfield, Minn., company. He has until the end of the month to make a bid for Best Buy, a deadline which the company has already extended. It isn't clear which option Schulze will pursue.
Schulze quit the company after his protégé, Brian Dunn, was forced to resign as CEO after news emerged that he was having an inappropriate relationship with a female employee. Schulze came under fire because he knew about the affair but failed to notify the rest of the board. Regaining control of Best Buy would certainly be a personal vindication for him.
Best Buy shares rose more than 6% Thursday to $16.09 as investors bet that all hope was not lost for the big-box retailer. The shares have been on a tear this year, gaining more than 34% after the company reported a holiday season that wasn't as dismal as Wall Street had feared. Wall Street analysts, though, believe the stock price is ahead of itself. Their average 52-week target is $13.57.
CEO Hubert Joly has been combating "showrooming" -- the consumer tendency to look at merchandise at brick-and-mortar stores only to make purchases online at lower prices. During the holiday season, he introduced a policy where Best Buy would match the prices of rivals such as Amazon
(NASDAQ:AMZN). This yielded some positive results.
During the holiday period, online sales surged 10% to $1.1 billion. Unfortunately, comparable-store sales, a key metric of performance at stores open at least a year, were flat. While that was better than what Wall Street had feared, it still highlights the Herculean challenges ahead for Best Buy.
Editor's Note: This story by Jonathan Berr was originally published on MSN moneyNOW.
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