On Tuesday, Brian Dunn, the CEO of Best Buy (BBY), resigned without any explanation as to the reason. It seemed like an unusual move considering the recently announced restructuring that Dunn had introduced and was to oversee. On the news, the Street panicked and the shares ended the day down approximately 8%. Now, the shares ending down didn't surprise me given the extreme pessimism surrounding BBY, as well as the unusual timing of the resignation.
By Thursday, reports were that BBY was investigating an improper relationship between Dunn and a female employee (this may have contributed to the shares closing Thursday's session at $22.28, up 1.28%). This is good news for shareholders. Obviously, I do not condone improprieties with female employees or any type of harassment. However, from a purely analytical standpoint as a shareholder, it is much better that the problem was something like this than any financial improprieties.
Putting Dunn in the rear view mirror, the search is now on by the Board of Directors for a new CEO. I have every reason to think that they will make a great decision. BBY has had a history of good executives with very little turnover. Before Dunn, Brad Anderson was CEO and his predecessor was Richard Schulze, founder and current chairman. I am sure that the Board and those involved are well aware of the challenging new retail environment and will choose someone with a background that is not only suited toward traditional electronics retail but understands the digital aspects as well. However, as I have mentioned in previous articles (see below), I do not think the retailing environment has changed as much as people think.
If the Board succeeds and finds the right CEO, I am certain that the doomsayers will be proven wrong in the long run. Let us wait and see what happens. So thank you, Wall Street for panicking over nothing. I purchased more shares and continue to lower my cost basis. Also, BBY now has a dividend yield around 3% for those who are considering buying shares.
One last thing: There are rumors swirling through various news outlets that Brad Anderson may come back as CEO. This would be a very good decision in my view.
If you would like to read more on BBY:
Disclosure: I am long BBY.