Today Brian Dunn, CEO of Best Buy, announced he will leave the company after 28 years.
In a recent blog “Note to Best Buy: Sales Rule So Cost Cuts Just Won’t ‘Cut It’” I outlined the continuing headwinds in the brick and mortar CE business (online, online and more online) as well as why going the route of cost cutting at Best Buy will not solve the problem. After all, investors will only tolerate sales declines for only so long. Recently Best Buy projected comp stores sales declines of 2-4% on top of years of negative results.
Time is up. And investors have voted with the stock price, which has declined -26% over the past year.
Can we blame Brian Dunn for Best Buy’s current woes?
While many are pointing to Dunn’s shortcomings as a CEO lets look at a bit of history. The announcement Dunn would become CEO came in January 2009. That was during the time Circuit City, the #2 CE retailer was liquidating stores. In fact the announcement that Dunn would take the helm came within days after Circuit announced it would liquidate all remaining 500+ stores. The market share story was off and running and a “store guy” (Dunn started as a sales associate in 1985 and was named President of North America Retail in 2004) with a long company history seemed to be the obvious candidate.
If the Board could re-write history maybe an online exec would have made more sense. Three years later we now understand the true impact of online competition and the simple commoditization of CE products. To put it simply, we now understand just how much shoppers are using physical stores as a showroom and buy cheaper online. Should Dunn have seen the light sooner and been more aggressive with store closures? Sure. The recent announcement the company would close 50 stores was too little too late.
We can also point to execution mishaps as recently as this holiday season. Best Buy was accused of being the Grinch this past holiday as orders placed as early as Black Friday went unfulfilled in time for Christmas. Bottom line, Public Relations disaster. When shoppers can get it cheaper elsewhere you can’t screw these things up.
But let’s not put all the blame on Dunn. And let’s not forget some other debacles we have seen from Best Buy. These were not on Dunn’s watch, rather, he inherited them. Take the Carphone Warehouse JV announced in May 2008 and the UK big box roll-out schedule. This couldn’t have come at a worse time for UK retail. The first stores were open less than a year before the plug was pulled on the roll-out. Best Buy branded stores in Turkey and China met the same fate.
The question now is who if anyone can turn this ship around? Store closures are a move in the right direction but probably can’t come fast enough for investors.
Too bad Ron Johnson is spoken for…If JC Penney doesn’t work out I am betting there is a desk for him in Richfield, MN.