In an unusual clarification, Best Buy said late Tuesday that CEO Brian Dunn had resigned amid a probe into his “personal conduct” — just hours after announcing that Dunn had left the company after “mutual agreement” that the big-box retailer needed new leadership. The mysteriously terse update, which came after an inquiry by the Minneapolis Star-Tribune — Best Buy’s hometown paper — threatened to deepen the trouble at the struggling electronics giant.
Best Buy had originally issued a statement saying there were “no disagreements between Mr. Dunn and the company,” but nevertheless there was “mutual agreement that it was time for new leadership to address the challenges that face the company.” Best Buy has struggled in recent years as consumers flocked to online options, and in some cases, even used Best Buy stores as showrooms to eyeball merchandise before eventually heading to Amazon.com. In the year that ended March 3, Best Buy lost $1.2 billion, compared with a profit of $1.3 billion the previous year.
That would have been bad enough.
But then, after questions from the Star-Tribune, Best Buy issued a further statement: “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. “Prior to the completion of the investigation, Mr. Dunn chose to resign.”
Best Buy did not specify the nature of the investigation. Company director of corporate public relations Susan Busch did not return e-mails or phone messages left seeking further comment.
In an interview with Bloomberg TV, Wedbush Securities analyst Michael Pachter said the new revelations make the situation for Best Buy even worse. Speaking of Dunn, Pachter said: “It seems like he’s a pretty decent guy and a family guy, so I’m hopeful that he just added up something wrong on an expense report and it crossed the line and it’s nothing worse than that.”
But Best Buy’s carefully worded statement citing personal issues “unrelated to the company’s operations or financial controls” seems to suggest that the problem may not have to do with accounting or expense shenanigans. Whatever Dunn’s personal issues, Pachter said, they’re temporarily obscuring the more fundamental problems at the company.
“I think the tragic thing about this being a personal-conduct issue is that it’s not an acknowledgement that the company is headed in the wrong direction,” Pachter said. “If the reason they let Brian leave was personal and not because he was a bad CEO, then I think they’re in even worse trouble than they were in yesterday.”