Best Buy (NYSE:BBY) Chief Executive Brian Dunn has stepped down after less than three years at his post, as the company — the biggest consumer electronics retailer in the world — faces intense competition from online retailers and discounters.
Dunn has been criticized for allowing Best Buy to become little more than a showroom for Internet retailers like Amazon.com (NASDAQ:AMZN), as shoppers visit Best Buy stores to check out items before buying them online at lower prices. The company has posted slumping same-store sales in six of the past seven quarters. Notably, Best Buy also reported declines during the 2010 and 2011 holiday seasons, despite offering big discounts and free shipping. Same-store sales sank 2.4 percent in the most recent quarter, including a 2.2 percent decline at U.S. stores open at least 14 months.
“I hate to be rude, but I think he was doing a terrible job,” Wedbush Securities analyst Michael Pachter said of Dunn. “This is a company that had a sales guy in charge, and I just don’t think they are well positioned to deal with the onslaught from the Internet. They have a big disadvantage to the Internet retailers because they have a big cost structure. So they need a guy who can fix that rather than trying to sell more stuff.”
Board member Mike Mikan will serve as interim chief while the company looks for Dunn’s permanent replacement, Best Buy said. According to analysts, Dunn’s replacement will need to have experience in e-commerce or have a grasp of the upheaval going on in the current retail electronics market, as well as have what it takes to seriously cut Best Buy’s cost structure.
Best Buy announced plans in March to close 50 of its 1,100 big box stores and eliminate 400 corporate and support jobs. The stock is down more than 32 percent since Dunn became CEO, compared with a 52.7 percent increase in the Standard & Poor’s 500 index. Shares of Best Buy were down 2.2 percent to $22.16 in late morning trading on Tuesday, having fallen earlier in the session to $21.62, their lowest since December 2008. Dunn started at Best Buy as a sales associate in 1985 and rose through the ranks to become CEO in June 2009.
Amazon is having a nice day kicking butt and taking names: Let’s Face It: Amazon Ate Best Buy’s Lunch!