Shares in electronics retailer Best Buy are down nearly 6% on the day after Best Buy CEO Brian Dunn said Tuesday he is leaving the company. Director Mike Mikan is taking over as interim CEO while the retailer searches for Dunn’s replacement.
“There were no disagreements between Mr. Dunn and the company on any matter relating to operations, financial controls, policies or procedures,” a Best Buy statement said. “There was mutual agreement that it was time for new leadership to address the challenges that face the company.”
Mr. Mikan was previously the chief financial officer of United Health Group.
Best Buy has come under increased market scrutiny in recent months as the Company has been struggling with increased competition from eRetailers like Amazon. Last month BBY had announced plans to close 50 of their retail locations in a cost cutting move to try and $800 million by fiscal year 2015.
In addition, the Company produced lackluster operating results that missed Wall Street’s revenue forecasts.
After Circuit City collapsed following 2008′s financial crisis there was a general sense in the market place that Best Buy could really capitalize on the fall of its chief competition. However, the electronics and media consumer has shown a greater propensity to shop online.
Whomever the next man up will be can look forward to a myriad of challenges ahead. Industry research has shown the BBY struggles in three major areas:
1.) Price Comparison – With a name like “Best Buy” the Company does not seem to live up to the title when comparison shopping. In many instances Amazon, Sears and Wal-Mart are beating the Company at price ponts for appliances and consumer electronics.
2.) Media consumption via download services like Apple, Xbox Live and Netflix and others has been on a steady rise the past few years. That means fewer shoppers heading into the store to buy CD’s, Movies and Games.
3.) Customer Service. The Company’s decision to cancel over 30,000 online orders a few days prior to Christmas didn’t do them any favors.
It will be interesting to see what direction the Company will move towards with their next choice for CEO. They certainly will have their work cut out for them.