Best Buy CEO Out As Big Box Retailer Struggles With Sales, Services3:50 PM EST Tue. Apr. 10, 2012
Best Buy laid out a plan last month to reduce costs by $250 million in fiscal 2013 and $800 by fiscal 2015. But CEO Brian Dunn won't be around to see it through.
Dunn resigned Tuesday from the Minneapolis-based big box retailer, the result of a "mutual agreement" between Dunn and Best Buy's board of directors, according to a release from the company. Director G. Mike Mikan has been named interim CEO while the company searches for a permanent replacement.
On March 26, Best Buy announced plans to close 50 stores in the United States, lay off 400 corporate employees, and test smaller stores in certain markets in order to cut costs. The company posted a $1.7 billion net loss, or $4.89 per share, for the fourth fiscal quarter ended March 3, results that included a $2.6 billion charge mostly related to a restructuring in Europe.
Best Buy has struggled with sales from its big box stores. In six of the last seven quarters, sales from comparable stores fell compared to the previous-year period. In addition, same-store sales have decreased in three of the last four years (with a 0.6 percent increase in fiscal 2010 being the only uptick).
To counter that, Best Buy has made investments to try increase its services mix and become more profitable, but success has been challenging in that regard, too. For the three-month period ended March 3, services accounted for 5 percent of sales in the U.S. and same-store services revenue had fallen 4.5 percent after increasing 7.5 percent the previous year.
Most recently, Best Buy launched a channel program to recruit telecom and cable resellers for its small business maintenance and repair services.
Last November, Best Buy purchased mindShift, a $100 million MSP for $167 million in an attempt to add managed services to its SMB portfolio.
Mike Jennings, president of BEI, a Reston, Va.-based MSP, was concerned last fall after Best Buy bought mindShift that his business might be impacted. But that hasn't been the case, Jennings said.
"I don't see them. I've been a little bit surprised. We're not running into them as much as I thought, assuming Best Buy was really going to get behind them out there and really push [mindShift], but they're no," he said. "I might see them less than I used to see them. I'm a little surprised."
Jennings was aware of Best Buy's plans to close stores and wondered whether cash flow problems might be impacting mindShift's success in the market. Still, he isn't ready to declare victory just yet. "When I think about possible competitive threats, they're still there. I still consider them a guy I have to be wary of," he said.
Best Buy shares were trading at $21.47 Tuesday afternoon, down 1.15 cents or 5.1 percent.