With New Chief, Best Buy Tries to Set Its Own Turnaround

Best Buy, the struggling electronics retailer aiming to turn around its fortunes, announced Monday that it had hired the chief executive of the hospitality company Carlson as its new leader - a move that is likely to be the first of several disclosures the company plans to make to reassure investors.

Best Buy, whose stock is down more than 20 percent this year, also said that talks with its founder, Richard Schulze, had ended over the weekend, leaving his efforts to take over the company in question.

Best Buy is scheduled to report earnings on Tuesday, when it is expected to provide more details about its turnaround plans.

The company said Monday that Hubert Joly, a Frenchman who oversaw Radisson hotels and Country Inns and Suites as Carlson's chief, will join Best Buy as its chief in early September, once he obtains a visa. He gained experience in corporate turnarounds as an executive at Vivendi and Electronic Data Systems.

“Hubert was an outstan ding candidate for this position and I am confident he will be a great fit for Best Buy,” Hatim Tyabji, Best Buy's chairman, said in a statement. “Hubert's range and depth of experience in transforming companies is exactly what the company needs at the moment, as is his energetic, imaginative and experienced leadership in executing strategies.”

Investors, however, seemed unhappy with his selection as chief, as the stock tumbled 10 percent on Monday to close at $18.16.

“We find Mr. Joly's résumé unimpressive, and believe he lacks sufficient experience to engineer a turnaround at Best Buy,” Michael Pachter of Wedbush Securities wrote in a research note on Monday. “Mr. Joly's experience in U.S. retail is virtually nonexistent, with all of his experience in the media, technology and hospitality sectors.”

His appointment caps a monthslong search for a new chief following the departure in April of Brian Dunn, who left after the board raised concer ns about an “inappropriate relationship” with a 29-year-old employee. Mr. Dunn was replaced on an interim basis by George Mikan, a director at the company.

Mr. Mikan will continue to serve on Best Buy's board, and will become the chairman of its audit committee.

Separately, the company said on Sunday that it had offered to grant Mr. Schulze access to confidential information to help him firm up what could be an $8.8 billion bid - but the offer was rejected.

The electronics retailer said that it had responded to a second letter from Mr. Schulze asking for permission to begin performing due diligence to glean information that would support a potential bid of $24 to $26 a share.

Under the terms of the proposed agreement, Best Buy said, the board would have waived a provision of Minnesota corporate law to allow Mr. Schulze to formalize a group of partners that would support a possible deal. It would also have allowed the company founder to bring forwa rd a fully financed deal within 60 days.

And if the board declined to take Mr. Schulze up on his offer, he was free to take any offer directly to Best Buy's shareholders after Jan. 1.

But Mr. Schulze was unhappy with some of the proposed terms, according to people with direct knowledge of the matter. On Friday, Best Buy's board initially demanded that the founder refrain from going directly to shareholders or calling a special investor meeting for 18 months. On Saturday, that was shortened to one year.

And by Sunday, that was again reduced to Jan. 1, to allow Best Buy to make it through the holiday season without worrying about additional challenges.

In a letter sent to Best Buy's directors on Friday, the second letter he had made public since Aug. 6, Mr. Schulze said that he was simply seeking access to the company's books and was looking to form an investor group.

He added that his investment bankers at Credit Suisse were highly confident that they could line up the requisite debt financing, which could amount to perhaps $7 billion.

In a statement late on Sunday, Mr. Schulze said, “We were in the process of negotiating an acceptable standstill period when, without notice to me or to any of my advisers, the board issued its announcement.”

He added, “I am shocked by this course of action but, as the largest shareholder of Best Buy, I remain hopeful that the board will engage in good faith discussions with us for the benefit of shareholders, employees and customers.”