Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
The consumer electronics retailer says Brian Dunn resigned amid an investigation.
Brian Dunn suddenly resigned as CEO of Best Buy Co. Inc. today amid an investigation into his personal conduct by the company's board of directors. The consumer electronics retailer says there were no disagreements between Dunn and Best Buy, but that both agreed that it was “time for new leadership to address the challenges that face the company,” according to a Best Buy statement released this morning announcing Dunn’s resignation. A later statement revealed more of what led to Dunn's resignation.
“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,” a spokeswoman for Best Buy’s board of directors says in a statement obtained by Internet Retailer. “Prior to the completion of the investigation, Mr. Dunn chose to resign.” The company provided no further details into what kind of conduct it was investigating.
Best Buy named G. Mike Mikan as interim CEO as it conducts a search for a new chief executive. Mikan has been a member of Best Buy’s board of directors since 2008 and previously was chief financial officer and executive vice president of UnitedHealth Group Inc., a health care insurance company.
Dunn worked for Best Buy for 28 years and took on the CEO job in 2009.
Last month, Best Buy announced it was restructuring itself following a $1.2 billion net loss for fiscal 2012. The retail chain also announced it would close 50 stores and cut 400 jobs in a drive to trim $800 million in expenses.
E-commerce was one of the few bright spots for Best Buy last year. Sales increased about 18% to $2.95 billion in fiscal 2012 from $2.50 billion in fiscal 2011, whereas total sales increased just 1.9% and comparable-store sales declined 1.7%. Web sales accounted for 5.8% of total sales and the company has said further developing e-commerce is a priority.
"We thank Brian Dunn for his many years of service to the company and wish him well in his next endeavors," says Richard Schulze, founder and chairman of Best Buy. "As we move forward, we are very pleased to have a strong leader with Mike Mikan's credentials as interim CEO."
Retail analysts say Best Buy's next CEO will have to work hard to satisfy consumers' evolving shopping behaviors. “Brian Dunn’s resignation does signal a new chapter for Best Buy, and a much needed new chapter,” says Candace Corlett, president of WSL Strategic Retail, a marketing consultancy for retailers. Best Buy’s new CEO will have to lead changes that are more attuned to how consumers shop today, and in a manner that is cost-efficient for Best Buy, she says. “Best Buy helped to speed the shopper transition to online buying in its category, but it was slow to envision the implications of its online success—they no longer need all those big stores and shoppers no longer need to drive to get to a Best Buy to purchase electronics,” Corlett says. “There needs to be a better reason why to go to a Best Buy store, beyond buying product.”
Nikki Baird, managing partner at research and advisory firm Retail Systems Research LLC, says Best Buy has been quick to respond to the trends that are impacting retail today, including online shopping, cross-channel shopping and price transparency. But as Best Buy’s recent financial performance shows, the retailer’s responsiveness hasn’t kept pace with what consumers want. Baird says Best Buy should serve as a bellwether for other store retailers. “This same level of business model disruption is heading their way too—maybe not quite so big or as fast as it has hit consumer electronics—but coming soon nonetheless,” she says. “Whoever leads Best Buy next needs to maintain a relentless focus on the customer first and foremost, and on how to create great experiences around the products Best Buy sells.”
Best Buy is No. 11 in the Internet Retailer Top 500 Guide.
Melinda Driscoll, digital analytics senior manager at Best Buy, will speak this June at the Internet Retailer Conference & Exhibition 2012 in Chicago in a session titled “The new age of analytics: Creating a data strategy that leads to increased sales.”