Best Buy CEO Brian Dunn is stepping down from the nation's largest consumer electronics retailer, a company that has been largely criticized for not responding quickly enough to growing competition and the changing shopping habits of Americans.
Best Buy Co., based in Minneapolis, said Tuesday that it was a mutual decision, and that there were no disagreements with Dunn on any matter relating to operations, financial controls, policies or procedures.
But Dunn, a 28-year veteran of Best Buy, had been CEO and director since June 2009, and the company said it was time for new leadership given the challenges the company faces.
Best Buy said that it has already created a search committee for identifying and choosing its new CEO. Board member Mike Mikan, 39, will serve as interim CEO while the company searches for a permanent replacement. Richard Schulze will continue as chairman.
Best Buy's shares were down 51 cents, or 2.3 percent, to $21.14 in after initially climbing higher on the news.
"I think the departure is long overdue," said Brian Sozzi, chief equities analyst at NBG Productions, an independent research firm. "Best Buy's operational strategy has been way off the mark and late to address the fundamental industry upheaval."
The news comes as the pioneer of the big-box consumer electronics retailing format struggles to regain its footing. Best Buy lost $1.23 billion in the last quarter and revenue at stores opened at least a year, a key metric, dropped 1.7 percent for the year after having fallen 1.8 percent in the prior year.
The company has been hit hard by a number of factors. Once the bread-and-butter of electronics retailers, sales of TVS, digital cameras and video game consoles have weakened. Meanwhile, sales of lower margin items like tablet computers, smartphones and e-readers have increased. At the same time, Best Buy, like other big-box retailers, is finding that more people are using its stores as showrooms to browse for products and then going online to Amazon.com and other rival sites to buy at a lower price.
As a result, Best Buy is trying to become nimbler and avoid the fate of former rival Circuit City, which liquidated its business in 2009. A couple weeks ago, Best Buy, which has about 1,400 stores in the U.S., unveiled a restructuring plan that calls for it to close 50 of its U.S. big-box stores, open 100 small-format stores and cut $800 million in costs over the next five years.
The plan comes after Best Buy has made some inroads in the past year. The company has cut its square footage by 15 percent in about 43 stores. It did that by either subletting the space to other merchants or giving it back to the landlords.
But some analysts say Best Buy hasn't moved fast enough to reduce its foot print. They also say there are more opportunities for Best Buy to take advantage of its mobile business.
Gary Balter, an analyst at Credit Suisse, says Best Buy's mobile business accounts for nearly one-third of the retailer's profits, yet it accounts for less than 10 percent of the overall square footage.
Meanwhile, Dunn, a 50-year-old who started his career at Best Buy as a store associate, said he believes Best Buy is well-positioned.
"I leave it today in position for a strong future," Dunn said in a statement.