Best Buy (BBY) CEO Brian Dunn resigned today. While Wall Street's immediate reaction was to drive the electronic retailer's shares higher on the resignation (read: firing), the news is unlikely to delay the company's descent into irrelevance and/or bankruptcy.
Dunn has overseen more than his share of missteps since becoming CEO in mid-2009. Of these failings the most notable was the company's inability to deliver goods purchased online during Black Friday 2011, and not inform customers until several days before Christmas. Adding insult to injury, Best Buy offered little more than a meek "sorry" and excuses to those left with nothing under the tree.
The Christmas nightmare destroyed Best Buy's e-commerce ambitions and, with it, the company's last best chance at survival.
Despite a less-than-stellar time running the company, Dunn was more a victim of changing times than his own ineptitude. The enormous stores Best Buy used to put one-time competitor Circuit City out of business are an albatross around the company's neck, but it isn't just the stores sucking the life out of the chain either.
Best Buy is dying because the free standing consumer electronics stores model is obsolete. The albums and CDs that once occupied the most valuable space in gigantic Best Buy stores are not longer selling. Console video games are losing share to tablets. High definition wall-mounted televisions are commodities readily available at Wal-Mart (WMT), Target (TGT), or online.
A web search yields far more information about any electronics product than any sales associate ever could and nobody needs help wiring their stereos anymore.
The snarky suggestion that customers "shop at Best Buy then go home and buy at Amazon.com (AMZN)" is wrong. No one goes to Best Buy at all. The stores have nothing to offer that you can't get more easily and cheaper elsewhere.
Brian Dunn's departure wasn't a sign of life but a death rattle. Wall Street knows this, which is why the stock's pop quickly turned into a decline. Best Buy sacked Dunn because it was cheaper than jumping straight into Chapter 11.
Ultimately Dunn will be better off for having left now rather than having gone down with the Best Buy ship.
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