Richard Schulze, who turned his St. Paul Sound of Music store into the nation’s largest electronics retailer, has announced his intention to resign immediately as Chairman and leave the company’s board entirely.  An investigation found that Schulze had known for more than a year that then Best Buy CEO Brian Dunn was involved in an inappropriate relationship with a staffer.  When the results of the investigation including Schulze’s knowledge of the affair became public in May, Schulze announced a sort of phased resignation from the company he founded.  Schulze would remain as Chairman until after the annual meeting on June 21st and as a company director through the 2013 annual meeting. 

 

In a statement explaining his accelerated resignation, Schulze said he was leaving "in order to explore all available options for my ownership stake."  Schulze owns 20.1% of Best Buy stock, making him by far the company’s biggest shareholder (#2 is Fidelity Management, which has a 6.9% stake).  Schulze’s willingness to sell paves the way for a private investment company to make a bid for the company, and also signals that he feels that drastic moves will be necessary to save the foundering electronic retailing giant.

 

Schulze’s resignation is the latest blow the Minneapolis-based chain.  In March with sales plummeting thanks to competition on TV sales from online retailers, caused in part by an increase in "showrooming" as consumers used Best Buy to check out new TVs only to buy the model they like at a lower price online, Best Buy announced the closing of 50 stores (see "Best Buy Closing 50 Stores").  Two weeks later Best Buy CEO Brian Dunn resigned (see "Best Buy CEO Resigns"), but it was only later that it was revealed that Dunn’s departure was not the result of the chain’s poor performance, but rather the fallout from an inappropriate relationship with a female staffer. 

 

Now, as USA Today reports, that affair has claimed another casualty as Schulze has abruptly walked away from the face-saving staggered resignation arrangement announced in May. In his statement Schulze indicated "There is an urgent need for Best Buy to reinvigorate growth by reconnecting with today’ customers and building pathways to the next generation of consumers." 

Is the Schulze resignation an attempt to avoid more embarrassment or is it an attempt to make it easier for the company to get an infusion of capital in order to reinvent itself for the future?  It is certainly not a great time for Schulze to be unloading his stock with the price of Best Buy shares having lost nearly 36% of their value over the past 12 months.