After failed takeover bid by co-founder, company taps turnaround expert

NEW YORK -- The fight over Best Buy's future is getting ugly.

Best Buy Co, the nation's largest consumer electronics chain, announced Monday it has tapped Hubert Joly, the former head of global hospitality company Carlson and a turnaround expert, as the new CEO and president. The move comes a day after talks between the ailing retailer and its co-founder, former chairman and largest shareholder Richard Schulze failed over his takeover bid proposal.

In a statement issued Monday, Schulze criticized the choice, and vowed he would go forward with his proposal to take the company private.

"Best Buy continues to face enormous challenges and needs a clear plan and a proven leadership team with deep retail experience and knowledge of Best Buy to win back customers, inspire employees and reinvigorate its trusted brand," Schulze said in a statement.

Wall Street also didn't like the news, and investors sent Best Buy shares down more than 10 percent.

"A large scale turnaround could take two to three years and may be better executed as a private company," wrote David Binder, analyst at Jeffries & Co.

Despite the reaction to the news, the announcement of Joly's appointment as CEO adds some stability to a company that has been badly lacking it. Former CEO Brian Dunn left in April amid a company investigation into an "improper relationship" with a 29-year-old female employee. Schulze resigned as chairman a month later after the probe found that he knew about the relationship and failed to alert the board or human resources. Meanwhile, the company has struggled against growing competition and people's changing shopping habits.

Joly, who is French and is expected to take over as CEO in early September when his visa is secured, succeeds Mike Mikan, a board member who has served as interim CEO since Dunn resigned in April. Over the past 15 years, Joly has developed a track record of successful turnarounds and growth in the media, technology and service sectors.

The company is hoping Joly will help Best Buy avoid the fate of its rival Circuit City, which went bankrupt in 2009. Best Buy has struggled with weak sales since the recession began as its big-box stores have become outdated. The stores, which shoppers once flocked to, are becoming unprofitable as shoppers increasingly use them to browse for electronics, but then buy them for cheaper elsewhere.

Best Buy has seen annual declines in revenue at stores opened at least a year for two of the last three years. It posted a 1.8 percent drop in the latest fiscal year that ended March 3, a modest 0.6 percent gain in fiscal 2011 and a 1.3 percent decline in fiscal 2010.

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