Chicago, IL 3/11/12 (StreetBeat) -- Best Buy (NYSE: BBY) said late Tuesday that CEO Brian Dunn resigned amid an audit committee investigation into his personal conduct that had yet to be completed."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," the company said in a statement. "Prior to the completion of the investigation, Mr. Dunn chose to resign."
Different Story?
The company, which has wrestled with increasing pressure from online competitors and skeptical shareholders, said in an earlier press release that Dunn resigned amid a "mutual agreement."
"There were no disagreements between Mr. Dunn and the company on any matter relating to operations, financial controls, policies or procedures," according to the announcement. "There was mutual agreement that it was time for new leadership to address the challenges that face the company."
Director Mike Mikan will serve as interim CEO while the electronics giant looks for a permanent replacement for Dunn.
Best Buy's Battles
There’s ever-growing speculation that Best Buy now is serving too much as a showroom for its possibly toughest competitor yet, online retailer Amazon.com. The thought is that customers are perusing the aisles at Best Buy, trying out or considering games, cameras and phones, then buying them cheaper online, and sometimes with less sales tax, through Amazon or some other online merchant.
Former Best Buy CEO Brian Dunn responds to questions during a media day in 2009.The electronics retailer said in late March it's closing 50 stores and cutting 400 employees as it wrangles with how best to proceed in an evolving market for its products.
Cost-cutting is a key part of Best Buy’s reinvention as it gropes for direction and tries to distinguish its future from the past peril of its former competitors CompUSA, which liquidated and changed ownership in 2007, and Circuit City, which met its end in 2009.
"I think the departure is long overdue, and is natural to see following the sweeping business overhaul announced a couple of weeks ago," wrote Brian Sozzi, Chief Equities Analyst at NBG Productions. "It’s almost as if Dunn stayed on post a largely disappointing holiday selling season to lay the foundational strategy for the interim CEO and leave his mark on the business for the longer term."
A New Model?
Best Buy is pinning its hopes on a new model. It plans to open 100 U.S. Best Buy Mobile small format stores in fiscal 2013 and expects to have a total of 600 to 800 such stores by fiscal 2016. It’s testing what it refers to as Connected Stores, “remodeled big box stores that focus on connections, services and multi-channel experience through a total transformation of both the store and the operating environment.“
The operational strategy has been "way off the mark and late to address fundamental industry upheaval (price transparency in the palm of our hands, for one)," writes Sozzi, adding "the company has tossed money down the drain in repurchasing its shares, cash that should have been stored on the balance sheet to build a defense for a future of evolution as to how people consume goods and services."
Shares fell more than 3% in heavy volume on Tuesday.
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