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January 6, 2012 11:33 pm
Best Buy’s chief executive has hit back at critics who say the electronics retailer is destined to fail, capping a week of holiday shopping results that have underlined the intensity of competition in his sector.
Brian Dunn took the unusual step of responding to media criticism by acknowledging Best Buy’s shortcomings, but rejecting arguments that the internet has made bricks-and-mortar stores irrelevant and that his business model was wrong.
He made the comments in a blog post on Friday as Best Buy reported like-for-like US store sales down 0.4 per cent in December from a year ago. It stuck to its profit forecast for the quarter, unlike others whose margins have been eroded by desperate discounting.
Criticism of Best Buy’s business model, Mr Dunn said, “blatantly and recklessly ignores overwhelming evidence to the contrary”.
He cited the company’s $2.6bn cash flow in the past three quarters and a study by NPD Group that showed 80 per cent of consumer electronics were bought from or picked up in stores.
His post came after widespread coverage of Best Buy’s cancellation of some customers’ online Christmas orders – because it did not have the products in stock – and a scathing article in Forbes earlier this week that said it was “caught in a death spiral”.
The article said Best Buy was not only being undercut by Amazon, the internet retailer, on price but was suffering from pushy, poorly informed staff; bland, depressing stores; and a self-destructive focus on quarterly financial metrics.
Mr Dunn won backing from some commenters who responded to his post and said they were past or present employees, but others admitted that they bought electronics online themselves and complained of pressure to use aggressive sales methods in stores.
Best Buy shares rose 3 per cent on Friday but have fallen more than 30 per cent in the past year.
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