24/7 Wall St. has said for over a year that Best Buy (NYSE: BBY) could not be turned around under incompetent CEO Brian Dunn. Clueless Best Buy founder Richard M. Schulze must finally have seen what shareholder have for many quarters.
Best Buy was on the 24/7 Wall St. Most Hated Companies List which ran in January:
The electronics retailer broke the cardinal rule of customer relations. It failed to keep a promise to its customers — and told them when it was too late. Best Buy (NYSE: BBY) ran out of certain items that people had ordered for Christmas, but did not tell the customers until two days before the holiday. In a Forbes article, which argues that Best Buy will slowly go out of business, the author pointed out that t he retailer’s explanation made it appear that some force from outside the company caused the problem — this was not the case. According to the company’s press release, “Due to overwhelming demand of hot product offerings on BestBuy.com during the November and December time period, we have encountered a situation that has affected redemption of some of our customers’ online orders.” Did Best Buy encounter the problem, or did the problem encounter Best Buy? ForeSee research recently issued its 2011 Retail Satisfaction list for the holidays. Best Buy rival Amazon.com (NASDAQ: AMZN) was at the top of the list. Best Buy was not even in the top 20. Wall St. has no reason to be happy with Best Buy either. Its shares have fallen 30% in the past year.
Dunn was on the list we did for AOL’s Daily Finance entitled “9 CEOs Who Need To Be Fired” which ran late last year
Best Buy was the dominant consumer electronics retailer for five years. Revenue rose from $39.53 billion in fiscal 2007 to $50.27 billion last year. Unfortunately, net income has dropped from $1.37 billion to $1.27 billion over that same time. The market has not liked that margin compression. Best Buy shares are down 40% in the last five years and 22% year-to-date. Richard M. Schulze, the founder, might as well be the CEO. He ran the company from 1966 until 2006. He still has an iron grip on it. Brian J. Dunn was named chief executive in 2009, after 26 years with Best Buy. He was a poor choice. Best Buy has been hammered online by Amazon.com (AMZN) and other internet retailers. Dunn allowed Best Buy to go down the direction of Borders and Blockbuster: lots of big stores, not enough web traffic.
Walmart (NYSE: WMT)