Best Buy closed a major chapter in its 36-year history and opened another at its annual shareholder meeting here last month, where chairman and founder Dick Schulze officially handed over his company's operational reins to longtime friend and chief lieutenant Brad Anderson.
Although Schulze will remain an active chairman, focusing on long-range strategic planning and leadership development, a major portion of his new itinerary will be dedicated to personal and philanthropic pursuits (see story, p. 19).
It therefore falls to newly appointed CEO Anderson and his management team to steer the corporation through the next phase of development, as it assimilates its vast acquisitions, veers its product mix toward the networked home and ventures off into uncharted international waters.
The gathering, held at the University of St. Thomas, where he is a trustee, was a bittersweet occasion for Schulze, whose voice cracked with emotion at the mention of his late wife and Best Buy co-founder Sandra. He said it was her death one-year ago, from a rare, asbestos-related cancer, that prompted his decision to "relinquish control."
"I was literally disengaged from all things Best Buy and did what was best for Sandy," Schulze told the assemblage following a video montage saluting the former chief executive. But the company continued to thrive in his absence, with net earnings growing 44 percent to $570 million in fiscal 2002 while revenue climbed 28 percent.
"I saw that they could operate without me, so I decided to go with the momentum and go with the opportunity," he said. "I'm very proud to place the company's future in the hands of a very talented team."
Earlier, during the formal presentation, Schulze said the business was in a "truly special state when you can grow earnings and revenue at the same time. For years, we had to chose one over the other."
He attributed the strong results to a number of factors including a winning merchandise mix, a "totally differentiated" in-store shopping experience, effective supply chain management, and a steadfast focus on customer satisfaction.
He added that in an internal comparison of Best Buy to retail leaders Home Depot, Kohl's, Target, Wal-Mart, Walgreens and, in consumer electronics, Circuit City, the company emerged as best in class on every measure of performance. Those included:
Sales growth (20 percent or better annually)
Inventory turns (an average of 7.5 per year, matching Wal-Mart)
Sales per square foot (nearly $1,000 per square foot, far ahead of the pack)
Earnings per share (up 80 percent in the fourth quarter)
Return on equity (outpacing the retail industry for the past three years)
Schulze also expressed pride in the company's policy of donating 1.5 percent of its pre-tax profits from the prior year to charity, which in the current calendar year will amount to $14 million.
In his farewell remarks, Schulze thanked the company's 90,000 employees for creating a shopping experience that consumers want to keep coming back to. "We owe so much to the employees," he said. "We are a special company with a special culture. We work harder and are more committed to win than the next guy. The customers keep coming back because they're truly cared about."
He also lauded Best Buy's suppliers who have "stepped up and supported the company through changes in course, and now partner with us more completely than ever before. Without trust and relationships, it's extra difficult to makes gains by yourself."
Shareholders were thanked for their patience and support while riding out the "bad times," and board members were cited as engaged, caring and "tireless in understanding the business."
Schulze saved his warmest words for Anderson, whom he described as "bright, talented, a wonderful executive and a close personal friend," and for his wife of several months, Maureen. In poignantly personal remarks before the audience, he noted that she lost her husband to the same cancer that claimed his first wife, and that he had fallen in love with someone who shares his values and love of family.
"It's been a long journey, but what a wonderful journey it's been," he said. "God has shone on me in so many ways."