Best Buy CEO Brian Dunn resigns, had been with company 28 years; company cites mutual agreement that it was time for new leadership to address the challenges that face the company
April 10, 2012
– Best Buy Co. CEO Brian Dunn has resigned from the nation’s largest consumer electronics retailer, a company that has been struggling to rebound amid growing competition and changing shopping habits.
Best Buy, based in Minneapolis, said Tuesday that it was a mutual decision, and that there were no disagreements with Dunn on any matter relating to operations, financial controls, policies or procedures. But the company said it was time for new leadership given the challenges the company faces.
Best Buy said that it has already created a search committee for identifying and choosing its new CEO. Board member Mike Mikan, 39, will serve as interim CEO while the company searches for a permanent replacement. Richard Schulze will continue as chairman.
Best Buy’s shares rose 52 cents, or 2.3 percent, to $23.17 on the news.
Dunn, 50, who is a 28-year veteran of Best Buy and started his career there as a store associate, had been CEO and director since June 2009.
“I leave today in position for a strong future,” Dunn said in a statement.
The announcement comes a couple weeks after Best Buy unveiled a restructuring plan that calls for closing 50 of its U.S. big-box stores, opening 100 small-format stores and cutting $800 million in costs over the next five years. Best Buy’s plan is an effort to become nimbler and avoid the fate of former rival Circuit City, which liquidated its business in 2009.
Best Buy has been hit by a couple factors. Once the bread-and-butter of electronics retailers, sales of TVS, digital cameras and video game consoles have weakened. Meanwhile, sales of lower margin items like tablet computers, smartphones and e-readers have increased.
At the same time, Best Buy, like other big-box retailers, is finding that those hulking stores are no longer attractive to consumers looking for one-stop shopping. Instead, more people are using them as showrooms to browse for products and then going online to Amazon.com and other rival sites to buy at a lower price.
As a result, Best Buy continues to struggle. The company lost $1.23 billion, or $3.36 per share, for the year ended March 3. That compares with a profit of $1.28 billion, or $3.08 per share, in the prior year.
Annual sales rose 2 percent to $50.71 billion. But revenue at stores opened at least a year, a key metric because it excludes results from stores and open and close during the year, fell 1.7 percent for the year after having fallen 1.8 percent in the prior year.
Last week, credit ratings agency Standard & Poor’s put its corporate credit rating and other ratings on watch for a possible downgrade, saying at the time that the company’s restructuring plan “underscores the problems that Best Buy is having with its current business model.”
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