NEW YORK, Mon May 21, 2012 – Best Buy Co. Inc., the world’s largest consumer electronics chain, said it has selected headhunter Spencer Stuart Inc. to conduct the search for a new chief executive.
The news came almost six weeks after Brian Dunn resigned as CEO. Following his departure, the company said an internal probe found that Dunn had an improper relationship with a female employee.
Best Buy is under pressure to find a replacement for Dunn soon. At least two brokerages have downgraded the company this month citing lack of leadership.
“Best Buy does not plan to name a replacement anytime soon, which likely means the company will not have established leadership heading into the crucial 2012 holiday selling season,” said BB&T Capital Markets analyst Anthony Chukumba, who downgraded the retailer to “hold” from “buy.”
“Without knowing who will be leading the company and what their plan will be, we think the shares will likely be at best dead money for awhile,” Chukumba said on Monday, ahead of the company’s earnings report on Tuesday.
Best Buy is in the midst of what it expects to be a six- to nine-month search for a successor to Dunn. Board member G. Mike Mikan is acting as interim CEO. The company said it will consider internal and external candidates for the job.
On Monday, Best Buy also revealed the terms of its contract with Mikan, 41, who was appointed interim CEO on April 10.
RICHFIELD, Minn., Tue Apr 10, 2012 – Best Buy Co. CEO Brian Dunn has left the world’s largest consumer electronics chain, which has struggled against stepped-up competition from internet retailers and discounters.
Under Dunn’s tenure, which lasted less than three years, critics have complained that Best Buy became a showroom for Amazon.com and other Internet retailers, with consumers going to Best Buy stores to sample electronics like high-definition televisions, but then buying them elsewhere at lower prices.
The company, seen as a bellwether in the consumer electronics industry, reported declines in same-store sales in six of the past seven quarters, including during the 2010 holiday season, when it made a bad bet on technology like 3D television that consumers did not embrace.
Despite offering bigger discounts and free shipping to lure shoppers in the 2011 holiday season, same-store sales fell 2.4 percent in the latest 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 (Dunn) was doing a terrible job. 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,” said Michael Pachter, analyst at Wedbush Securities.
“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.”