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Thursday, April 12, 2012

Best Buy CEO Suddenly Resigns

Story first appeared on Yahoo News.

The Best Buy Co Chief Executive suddenly resigned from the company during an investigation into allegations of personal misconduct, the electronics retailer said on Tuesday.

The surprise departure comes as Best Buy, the world's largest electronics retailer, has struggled because consumers are purchasing more electronics online and can easily compare competitors' prices on their mobile devices while looking at a product in a Best Buy store.
Certain issues were brought to the board's attention regarding his personal conduct, unrelated to the company's operations or financial controls, and an audit committee investigation was initiated. Prior to the completion of the investigation, he chose to resign.

Best Buy said that a board member, would serve as interim CEO and that a search for a new CEO was under way.
The timing of his departure came as a surprise to Wall Street. Only two weeks ago, he presided over the company's announcement of a plan to close 50 of its 1,100 large stores and cut 400 jobs.

But critics have complained that under his tenure, which lasted less than three years, Best Buy became a showroom for and other online retailers, with consumers going to Best Buy stores to check out electronics like high-definition televisions, then buying them elsewhere for less.

The company, a bellwether for the consumer electronics industry, reported declines in same-store sales in six of the last seven quarters, including during the 2010 holiday season when it bet on technology like 3D television that was not embraced by consumers.
Despite offering bigger discounts and free shipping in the 2011 holiday season, Best Buy suffered a 2.4 percent drop in same-store sales in the quarter ended March 3, including a 2.2 percent decline at U.S. stores open at least 14 months.

The company was looking internally and externally for a permanent CEO and that the interim CEO would also be considered for that post.
The interim CEO has been a Best Buy director since April 2008. He formerly served as executive vice president and chief financial officer of UnitedHealth Group. At one point, he was considered a potential successor to UnitedHealth's CEO but left the U.S. health insurer to lead a private equity fund.

Best Buy's stock rose as much as 4.8 percent to $23.74 after the news that the CEO would be replaced, but the shares ended down 6 percent at $21.32.

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