Best Buy’s CEO Resigns. Who Next?
Best Buy Co.’s Chief Executive Officer Brian Dunn resigned on Tuesday, leading market observers to speculate on what type of executive would best lead the consumer electronics giant.
Board member G. Mike Mikan, who formerly served as EVP and CFO of UnitedHealth Group Inc., became interim CEO while a committee was formed to search for a successor.
According to Reuters, Mr. Dunn resigned as a result of an investigation into allegations of personal misconduct, the electronics retailer confirmed on Tuesday.
“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,” Claire Koeneman, a spokeswoman for Best Buy, told Reuters.
On Wall Street, many said Mr. Dunn, a 28-year veteran of Best Buy who had been CEO since June 2009, wasn’t moving Best Buy fast enough to counter the competitive pressures from online retailers, notably Amazon.
“Some investors had been frustrated with Dunn’s tenure, given his strong affinity for physical retailing and perceived slowness to adapt to threats facing the company,” Colin McGranahan, at Sanford C. Bernstein & Co, wrote in a note to clients attained by the New York Times.
Less than two weeks ago, Mr. Dunn outlined ambitious turnaround plans that included the closing of 50 larger stores and layoff of 400 workers as part of a plan to trim $800 million in costs. Slightly smaller “Connected” stores are also being tested in San Antonio and Minneapolis that focus more on mobile devices and service. They include an area similar to Apple’s Genius Bar that assist customers with services and connections and offer training and classes, and will complement further growth in its much smaller stores focused on selling mobile phones as well as its expanding online business.
Gary Balter, at Credit Suisse, told the Associated Press that Best Buy should close even more stores and further capitalize on its mobile business, which makes up nearly one-third of Best Buy’s profits but accounts for less than 10 percent of its net square footage.
Michael Pachter, an analyst at Wedbush Securities in Los Angeles, told Bloomberg that Best Buy needs someone who can manage the transition from big box to small box stores.
Anthony Chukumba, an analyst for BB&T Capital Markets, told Bloomberg that Best Buy should hire an outsider who is “more of a strategic thinker and not afraid to ruffle a few feathers.”
Other challenges facing Best Buy include a significantly erosion in movie and CD sales as well as weakness in its formerly core categories, TVs, digital cameras and video game consoles.
“I think the departure is long overdue,” Brian Sozzi, chief equities analyst at NBG Productions, an independent research firm, told the Associated Press. “Best Buy’s operational strategy has been way off the mark and late to address the fundamental industry upheaval.”
- Best Buy Announces Leadership Transition Interim CEO Named to Lead Company – Best Buy
- Best Buy’s Dunn Resigns as CEO; Mikan Steps In – Bloomberg
- Best Buy CEO Resigns – Wall Street Journal
- Best Buy’s Chief Executive Resigns – The New York Times
- Brian Dunn resigns as Best Buy CEO; co. says was a mutually agreed upon decision – Associated Press
Discussion question: What type of skills (merchandising, digital or other) are required to lead Best Buy at this point? What value do you place on bringing in an outsider in turnaround situations?