Dunn has been CEO since June 2009. Best Buy has posted a string of poor quarterly results since then. When it released earnings for the period that ended November 26, Wall St. was so shocked by the company’s results and forecasts that it drove Best Buy shares down more than 15%.
Dunn was bold enough to try to make what was a disaster into a positive development. He said in the earnings release:
I’d like to thank our employees around the world for their tireless efforts during the third quarter and a successful kickoff to the holiday selling season. We took actions to provide value to customers and drive our business in this competitive consumer environment. We are pleased to report positive traffic, comparable store sales growth and continued progress on our key strategic focus areas, highlighted by strong performance online.
There is little or no factual support for the comments. Amazon.com (NASDAQ: AMZN) continues to badly damage Best Buy’s earnings and its future projects. Best Buy has been unable to overcome that.
As evidence of investor reaction to the CEO’s tenure, Best Buy’s shares are off 43% over the past two years. Amazon’s are higher by 39%, and the S&P 500 is up 12% over the same period.
One of the greatest problems Best Buy shareholders face is a board run by the company’s founder, who appears to have acted as he pleased during Dunn’s tenure. Richard M. Schulze founded Best Buy and the company’s predecessor company, The Sound of Music, in 1966. Schulze holds nearly 18% of Best Buy’s shares. The most positive thing that can be said about Dunn’s tenure is that Schulze has lost a great deal of money as he has supported his CEO.
Dunn is a perfect example of a chief executive who has performed so badly and he has been in his position far too long to benefit shareholders. The best thing that could happen to Best Buy is that he be replaced with a retail executive who might turnaround the firm’s bricks-and-mortar and online operations.
Douglas A. McIntyre
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