The Board of Directors for Best Buy (BBY) announced that director and CEO Brian Dunn would be resigning from his position at the head of the major retail company. Reading the reactions from Dunn and the company, one might think that it was an amicable break.
“I have enjoyed every one of my 28 years with this company, and I leave it today in position for a strong future. I am proud of my fellow employees and I wish them the best,” said Dunn.
Richard Schulze, Best Buy’s Chairman and the company’s founder, had nothing but nice things to say about Dunn. “We thank Brian Dunn for his many years of service to the company and wish him well in his next endeavors,” said Schulze. “As we move forward, we are very pleased to have a strong leader with Mike Mikan’s credentials as interim CEO.”
However, the truth may be a tad more sordid than the public face being put on by some. Brian Dunn’s resignation comes ahead of a probe into his personal conduct at the company.
CEO Leaves a Company Struggling with Changing Marketplace
The probe into Dunn’s conduct was not initially reported with the anoucement of Dunn’s resignation, but later Tuesday the company acknowledged that the probe may have been a factor.
“Certain issues were brought to the board’s attention regarding Dunn’s personal conduct, unrelated to the company’s operations or financial controls, and an audit committee investigation was initiated,” said the company in a statement issued late Tuesday. “Prior to the completion of the investigation, Mr. Dunn chose to resign.”
Dunn’s 28 years at Best Buy began when he was a floor salesman, but he leaves a company that is beginning to flag. The company reported a $1.7 billion loss for its last fiscal quarter on March 29, also reporting that over 50 retail locations would be closed and 400 corporate jobs cut in order to slash some $800 million in costs. However, Best Buy’s struggles appear to come from the company being mired in an era prior to when internet titans like Amazon (AMZN) and eBay (EBAY).
“We are not completely surprised by today’s announcement, given the difficulties that have plagued Best Buy for years — namely, a deteriorating product cycle, overexpansion both domestically and internationally, as well as intensifying e-commerce threats,” said Alan Rifkin of Barclays Capital.
A New Direction with a New CEO?
Whoever moves into the top spot at Best Buy will be inheriting a troubling situation. With the entire brick-and-mortar retail industry appearing to be in real trouble, finding a new way forward for Best Buy could be a necessity even as the chain struggles to cut costs.
“Best Buy is a very dated store experience, rooted in the 1990s, and they need someone visionary,” said Customer Growth Partners’ Craig Johnson.