Best Buy’s chief executive has resigned suddenly after the company’s board launched an investigation into his “personal conduct”, ending a tenure in which investor confidence in the US electronics retailer’s ability to compete against online rivals plummeted.
A spokeswoman for the board said: “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.”
Mr Dunn could not be reached for comment. He joined Best Buy as a store assistant 28 years ago and had begun reforms to tackle its faltering sales and profit growth but still struggled to convince investors over the long-term outlook for the company, despite its $51bn revenues last year.
Best Buy did not disclose the inquiry in its initial announcement of his resignation on Tuesday, when it said: “There was mutual agreement that it was time for new leadership to address the challenges that face the company.”
The company said it was looking for a successor and named Mike Mikan, a Best Buy director and former executive vice-president of UnitedHealth, as interim chief executive.
During Mr Dunn’s time, Best Buy became a prime victim of “showrooming” shoppers who use bricks-and-mortar stores to research products then buy them online. His record was tarnished by operational problems, including gloomy stores and a failure to meet some orders on its website last Christmas.
Stacey Widlitz of SW Retail Advisors said of Mr Dunn: “He grew up in the store. His speciality is the stores. Was he the right guy for the chief executive? In this environment he was probably not the ideal candidate.”
Following Wall Street criticism of its international expansion, Mr Dunn last year pulled the plug on Best Buy’s big-box store partnership with Carphone Warehouse in the UK and closed nine own-branded stores in China.
Last month, as he reported a 2.2 per cent fall in holiday season sales, Mr Dunn said: “I’m not satisfied with the pace or degree of improvement in our performance and transformation.”
He unveiled plans to close 50 US big box stores and cut 400 jobs as part of an effort to reduce costs by $800m while also broadening an initiative to sell more online while making its stores smaller and more focused on mobile communications and devices.
But Best Buy shares slid 2.2 per cent in the seven trading sessions between then and his resignation. The company’s shares initially rose as much as 3.8 per cent on news of Mr Dunn’s resignation, but then fell sharply and closed down 5.9 per cent at $21.32.
Carol Levenson, director of research at Gimme Credit, said: “We doubt that any one man or woman is at fault or can single-handedly turn [it] around. Best Buy …is yoked to a business model whose time may have come and gone.”
She added, however, that it was still profitable and had a strong balance sheet, cash flow and brand.
Mr Dunn was promoted to chief executive soon after the liquidation of Circuit City, which left Best Buy as the US’s only national electronics chain. But rather than winning market share from it, Best Buy lost business to increasingly competitive online retailers with better prices and a widening selection.
Get alerts on Best Buy Co Inc when a new story is published