Musicland Is On the Block31 Mar, 2003 By: Holly J. Wagner
Best Buy is seeking suitors to buy its flagging Musicland subsidiary to concentrate on the company's core business and assets, the company announced today.
The specialty chain has hired an investment banking firm and other professionals to assist with the sale process.
"Over the last year, Musicland has suffered from further declines in CD sales and a continued slowdown in traffic in traditional shopping centers nationwide. In addition, it has been less successful than we had hoped in selling consumer electronics in its mall stores. As a result of a strategic study that commenced a few months ago, it was determined that Musicland would not be capable of meeting our original expectations," said Best Buy CEO Brad Anderson. "In an effort to derive the best outcome for all of our constituencies -- including our shareholders, employees, vendors, landlords and communities -- we have concluded that we should seek a buyer for our interest in Musicland."
Anderson confirmed that sales talks for the company's interest in Musicland are proceeding. He said that the intent in the interim is to help maximize Musicland's value in preparation for any outcomes remaining under consideration. He added that the Company expects to provide a further update on Musicland's status in June.
"We are working diligently to complete a sale of Musicland," Anderson said. "However, Musicland's management team and store employees remain committed to serving Musicland customers during this transition period. To underscore the importance of continuing to maximize the potential of this business, the board of directors of Musicland Stores Corporation has promoted Connie Fuhrman to the position of President. We believe that Connie, who most recently served as executive vice president of Musicland, will do an excellent job guiding Musicland in these challenging times."
On the heels of shuttering 110 unprofitable Musicland stores, Best Buy becomes the latest in a series of large concerns to turn its focus to core competency. Recently Sears announced it will sell its consumer credit unit and McDonald's announced plans to sell off its non-burger restaurant units.