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Best Buy CEO Resigns During Personal Conduct Probe

Discussion in 'Off-Topic Discussion' started by CatfishRivers, Apr 11, 2012.

  1. CatfishRivers

    CatfishRivers Well-Known Member

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    Best Buy CEO resigns during personal conduct probe | Reuters (click for full article)

    "(Reuters) - Best Buy Co Chief Executive Brian Dunn suddenly resigned from the company during 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," said Claire Koeneman, an external spokeswoman for Best Buy. She would not comment on what the issues were.


    Dunn could not be reached for comment.


    In a statement issued by Best Buy earlier on Tuesday, Dunn said, "I have enjoyed every one of my 28 years with this company, and I leave it today in position for a strong future."


    Best Buy said that G. Mike Mikan, a board member, would serve as interim CEO and that a search for anew CEO was underway.


    The timing of Dunn's departure came as a surprise to Wall Street. Only two weeks ago, Dunn presided over the company's announcement of a plan to close 50 of its 1,100 large stores and cut 400 jobs.


    But critics have complained that under Dunn's tenure, which lasted less than three years, Best Buy became a showroom for Amazon.com and other online retailers, with consumers going to Best Buy stores to check out electronics like high-definition televisions, then buying them elsewhere for less.


    The company, seen as a bellwether in the consumer electronics industry, reported declines in same-store sales in six of the last seven quarters."
     
    Last edited: Apr 11, 2012
  2. CatfishRivers

    CatfishRivers Well-Known Member

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    Best Buy CEO resigns amid internal investigation - BusinessWeek (click for full article)

    From the article: "The resignation adds to Best Buy's mounting problems. Up until a few years ago, the nation's largest consumer electronics retailer was the place Americans went to grab TVs and cameras. But the chain has suffered in the economic downturn and has been widely criticized for not being quick to respond to growing competition and the changing shopping habits of Americans.


    While industry watchers had been calling for changes at Best Buy, news of the investigation didn't sit well with Wall Street. On the news of the probe, Best Buy's shares fell almost 6 percent, or $1.33, to close at $21.32, after initially climbing higher on news of Dunn's departure. Best Buy's shares have lost more than half of their value since April 2006, when they were trading at $56.66 per share.


    "It's good news that he's gone," said Brian Sozzi, chief equities analyst at NBG Productions, an independent research firm. "But this adds another layer of uncertainty."


    Best Buy said Tuesday that board member Mike Mikan, 39, will serve as interim CEO while the company searches for Dunn's permanent replacement. A new CEO will face a big challenge trying to usher Best Buy into a new era.


    Sales of TVs, digital cameras and video game consoles -- once the bread-and-butter of Best Buy -- have weakened, while sales of lower margin items like tablet computers, smartphones and e-readers have increased. Adding to that, people increasingly use the stores of big-box retailers like Best Buy as showrooms to browse for products and then go online to Amazon.com and other sites to buy items at lower prices.


    Best Buy, based in Minneapolis, was expected to benefit from the liquidation of the company's main competitor Circuit City, which was overcome by growing competition in 2009. But instead, the company has continued to struggle even in the absence of its rival.


    Best Buy's revenue at stores opened at least a year -- a key measure because it excludes results from stores that open and close within the year -- has declined in three of the past four years. In the most recent fiscal year ended March 3, the figure fell 1.7 percent. That's on top of a 1.8 percent decline in the prior fiscal year.


    The chain also lost $1.23 billion, or $3.36 per share, in the most recent fiscal year. That compares with a profit of $1.28 billion, or $3.08 per share, in the prior year


    "Best Buy's operational strategy has been way off the mark and late to address the fundamental industry upheaval," Sozzi, the analyst at NBG Productions, said. "Big-box stores can't be fixed. They have to be re-invented."


    Best Buy, which has 1,400 U.S. stores, has been trying to revamp its business. In the past few years, the company has cut its square footage by 15 percent in about 43 stores. It did that by either subletting the space to other merchants or giving it back to the landlords.


    And a couple weeks ago, the chain unveiled a massive restructuring plan that calls for closing 50 of its U.S. big-box stores and opening 100 small-format stores focusing on its burgeoning mobile business that focuses on cell phones. It's also planning to cut $800 million in costs over the next five years.


    But analysts say there's more work to be done. Gary Balter, an analyst at Credit Suisse, says the company should close even more stores and take better advantage of its fast-growing mobile business. After all, Best Buy's mobile business makes up nearly one-third of the retailer's profits, he says, but accounts for less than 10 percent of the overall square footage."
     
    Last edited: Apr 11, 2012
  3. CatfishRivers

    CatfishRivers Well-Known Member

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    Best Buy, consumer electronics and the big-box dilemma - chicagotribune.com (click for full article)


    "The resignation of Best Buy's chief executive occasioned an existential quandary of sorts, what with the consumer electronics chain already in adapt-or-die mode because of, well, consumer electronics.


    If it becomes necessary to bury the big-box stores, where will they be able to buy a coffin large enough? And will they be able to resist the urge to shop for that bigger box online?


    Brian Dunn's exit Tuesday as Best Buy CEO, apparently related to what the company said was an internal investigation of his "personal conduct," doesn't mean the end of big-box retailing.


    But it brings still greater uncertainty to a company that is struggling and a concept that's been in flux. It's a reminder that the giant superstores that threatened the malls that threatened Main Street are themselves endangered by yet another change in consumer habits. And any successful retailer who thinks it can't be toppled is naive, in denial and/or asking to go bust. "
     
    Last edited: Apr 11, 2012

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