Best Buy CEO Brian Dunn, who rose from sales associate to lead the world’s largest electronics retailer, resigned Tuesday after 28 years at the company, in the latest sign of distress for the troubled U.S. big-box retail sector. Best Buy has struggled in recent years as consumers increasingly forsake in-person retail shopping in favor of online options, particularly Amazon.com, the booming e-commerce giant.
In a statement, Best Buy said 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.” Mike Mikan, a board member and former CFO of insurance giant UnitedHealth, will take over as interim CEO, the company said. Best Buy shares rose 3.3% before quickly falling 2.3% on news of the management change.
“I have enjoyed every one of my 28 years with this company, and I leave it today in position for a strong future. I am proud of my fellow employees and I wish them the best,” Dunn said in a statement.
Dunn’s departure represents an anti-climactic end to career in which he rose through the ranks to eventually lead one of the most successful retail operations in the country. As the consumer electronics boom hit full swing in the 2000s, Best Buy used aggressive price-cutting and wide selection to become the top electronics retailer, ultimately vanquishing its primary foe Circuit City.
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But the unrelenting rise of e-commerce giants like Amazon.com has put increasing pressure on Best Buy as consumers have shifted to online shopping. The company recently announced a restructuring plan to close 50 of its U.S. big-box stores and cut 400 corporate-level jobs, while opening 100 smaller stores focused on selling mobile phones, all in an effort to cut $800 million in costs over the next five years. In the year that ended March 3, Best Buy lost $1.2 billion, compared to a profit of $1.3 billion the previous year.
Adding insult to injury, giant retailers like Best Buy and Target have had to grapple with the emerging phenomenon of “showrooming,” in which consumers scout out prices in stores, and then use their mobile phones to check for better deals — and make purchases — at online alternatives like Amazon.com.
Dunn had faced criticism recently for not moving fast enough to address the challenge posed by the rise of online shopping. “I hate to be rude, but I think he was doing a terrible job,” Wedbush Securities analyst Michael Pachter told Reuters. “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.”
“They have a big disadvantage to the Internet retailers because they have a big cost structure,” Pachter added. “So they need a guy who can fix that rather than trying to sell more stuff.”
Last week, Standard & Poor’s warned that it might downgrade Best Buy’s credit rating, citing competitive threats to its business model.