Don't Blame Best Buy's Departing CEO for All of the Retailer's Woes
Today, Best Buy CEO Brian Dunn announced he will leave the company after 28 years.
In a recentblog, I outlined the continuing headwinds in the brick-and-mortar consumer electronics business (online, online and more online) as well as why going the route of cost cutting atBest Buy will not solve the problem.
After all, investors will only tolerate sales declines for only so long, and Best Buy recently projected same-store sales declines of 2 percent to 4 percent on top of years of negative results.
Time is up. And investors have voted with the stock price , which has declined 26 percent over the past year.
Can we blame Brian Dunn for Best Buy’s current woes? While many are pointing to Dunn’s shortcomings as a CEO, let's look at a bit of history.
The announcement Dunn would become CEO came in January 2009. That was during the time Circuit City, the No. 2 CE retailer was liquidating stores. In fact, the announcement that Dunn would take the helm came within days of Circuit's announcement that it would liquidate the more than 500 remaining Circuit City stores. The market-share story was off and running and a “store guy” with a long company history seemed to be the obvious candidate. (Dunn started as a sales associate in 1985 and was named president of North America Retail in 2004.)
If the board could rewrite history, it might consider that maybe an online exec would have made more sense. Three years later, we now understand the true impact of online competition and the simple commoditization of CE products. To put it simply, we now understand just how much shoppers are using physical stores as a showroom and buy the products cheaper online.
Should Dunn have seen the light sooner and been more aggressive with store closures? Sure. The recent announcement the company would close 50 stores was too little, too late.
We can also point to execution mishaps as recently as this holiday season. Best Buy was accused of being the Grinch this past holiday as orders placed as early as Black Friday went unfulfilled in time for Christmas. Bottom line: That's a public relations disaster. When shoppers can get it cheaper elsewhere, you can’t screw these things up.
But let’s not put all the blame on Dunn. And let’s not forget some other debacles we have seen from Best Buy. These were not on Dunn’s watch, rather, he inherited them.
Take the Carphone Warehouse joint venture announced in May 2008, and the U.K. big box roll-out schedule. This couldn’t have come at a worse time for U.K. retail. The first stores were open less than a year before the plug was pulled on the roll-out. Best Buy-branded stores in Turkey and China met the same fate.
The question now is who, if anyone, can turn this ship around? Store closures are a move in the right direction, but probably can’t come fast enough for investors.
Too bad Ron Johnson is spoken for. If JC Penneydoesn’t work out, I am betting there is a desk for him in Richfield, Minn.
Stacey Widlitz is the President of SW Retail Advisors Inc. She has worked at UBS, SG Cowen, Fulcrum Partners and in 2005 was one of three analysts to launch the Research Department at Pali Capital, where she covered Retail and Home Video for 5 years. Follow Stacey on Twitter
Stacey Widlitz is the President of SW Retail Advisors Inc. She has worked at UBS, SG Cowen, Fulcrum Partners and in 2005 was one of three analysts to launch the Research Department at Pali Capital, where she covered Retail and Home Video for 5 years. Follow Stacey on Twitter @StaceyRetail.