Tuesday's abrupt resignation of Best Buy Co. (NYSE: BBY) CEO Brian Dunn came amid an investigation by the company into Dunn's personal conduct, the consumer electronics retailer disclosed.
Certain issues were brought to the board's attention regarding Mr. Dunn's personal conduct, unrelated to the company's operations or financial controls, and an audit committee investigation was initiated, Minnesota-based Best Buy said in a statement late Tuesday. Prior to the completion of the investigation, Mr. Dunn chose to resign.
Best Buy disclosed no details about Dunn's conduct or any other facet of its investigation. According to the Star Tribune of Minneapolis, the company acknowledged late Tuesday that its probe had come in response to an inquiry by the newspaper. Best Buy's headquarters is in Richfield, Minn., a suburb of Minneapolis-St. Paul.
In announcing his resignation earlier Tuesday -- minutes into a trading session that saw Best Buy shares swing from an initial upward surge to a closing loss of nearly 6 percent -- the company said Dunn's resignation was a matter of mutual agreement. Best Buy said it and Dunn agreed it was time for new leadership to address the challenges that face the company and that there were no disagreements on any matter related to operations, financial controls, policies or procedures.
Mike Mikan, a member of Best Buy's board of directors, was chosen to succeed Dunn on an interim basis while the board seeks a pemanent replacement. Company founder Richard Schulze will remain as chairman.
I have enjoyed every one of my 28 years with this company, and I leave it today in position for a strong future. I am proud of my fellow employees and I wish them the best, Dunn, 51, was cited as saying in Best Buy's initial statement.
Dunn became CEO in May 2009, having worked his way up from a job as a store salesman.
Analysts had mixed reactions Tuesday to Dunn's resignation, before news of the company investigation broke. Some tied his departure to the intially euphoric rise in share price, while others said Best Buy's problems run deeper than the former chief executive.
Brian was never the big problem and the person who comes in will not be the big solution, David Strasser, an analyst at Janney Montgomery Scott, told Dow Jones Newswires. It's going to take some time to turn this company around. It's not going to happen overnight.
The shares closed Tuesday at $21.32, down $1.33, capping a day that had seen the price rise to $23.72 in the minutes after Dunn's exit was announced. The stock has lost more than 17 percent of value since the company on March 29 reported a $1.7 billion loss for last year's fourth quarter.
In its earnings announcement, Dunn vowed to close 50 of the retailer's 1,100 big-box U.S. stores while opening hundreds of smaller outlets focused on mobile-phone sales. The company also said it plans to cut 400 jobs in a bid to save over $1 billion in coming years.
So far, those plans haven't impressed markets. After word of Dunn's resignation was made public, credit-rating firm Standard & Poor's put Best Buy debt on a downgrade watch, warning it could soon cut the company's bonds to junk status.