Best Buy today said goodbye to CEO Brian Dunn after less than three years at the helm of the world’s largest consumer electronics chain.
His resignation, not long after Best Buy announced disappointing sales over the crucial holiday season and the closure of some 50 of its big-box stores, is a mutually-agreed-upon parting of the ways according to Dunn and his former employer. (Dunn spent a total of 28 years with Best Buy, starting out as a sales clerk.) Best Buy stressed in the press release announcing Dunn’s departure that there had been “no disagreements between Mr. Dunn and the company on any matter relating to operations, financial controls, policies or procedures. There was mutual agreement that it was time for new leadership to address the challenges that face the company.”
Best Buy’s shares jumped on the news. Wall Street’s reaction suggests that investors may have been less than thrilled with Best Buy’s “Transformation Strategy” revealed late last month. To address its weak performance, Best Buy said it would close 50 of its 1,100 big-box stores in the US, open 100 small-format stores and cut $800 million in costs over the next five years. Some investors felt the retailer didn’t go far enough in terms of stores closures and that its big-box business model is ill-suited for today’s retail environment. Best Buy has been losing sales to online retailers, such as Amazon.com, and big discounters like Wal-Mart Stores. Also, last week Standard & Poor’s put Best Buy’s corporate credit rating and other ratings on watch for a possible downgrade, saying that the company’s restructuring plan “underscores the problems that Best Buy is having with its current business model.”
With its business model in doubt, it’s time to call in a fresh perspective. Director Mike Mikan has been named interim CEO while the company searches for a permanent replacement for Dunn. Whoever is chosen to lead Best Buy will have his or her work cut out for them ensuring the company avoids the fate of former rival Circuit City, which filed for bankruptcy in 2008 and liquidated.
Photo by Norman Matteson, used under a Creative Commons license.
Update: Later in the day Best Buy revealed that Dunn resigned during an investigation by the board into his “personal conduct.” No details on the inquiry or the conduct under investigation were given except to say: “Certain issues were brought to the board’s attention regarding Mr. Dunn’s personal conduct, unrelated to the company’s operations or financial controls, and an audit committee investigation was initiated. Prior to the completion of the investigation, Mr. Dunn chose to resign.” — AB
The latest: Citing a person close to the company, the Star-Tribune today reported that Dunn allegedly used company resources to carry out an inappropriate relationship with a female employee. — AB 4.12.12