Best Buy Plans 6 MN Store Closures, Begins CEO Search
Best Buy Company, Inc., has identified 50 big-box stores that it will close this year-including six in Minnesota-as it aims to revamp its business model and reduce costs.
The company's board, meanwhile, is establishing a search committee for determining Best Buy's next CEO.
Richfield-based Best Buy said in late March that it expected to close 50 big-box stores and disclosed five affected Minnesota locations: Brooklyn Center, Edina, Hutchinson, Lakeville, and Rogers. But the company on Saturday released a complete list of planned store closures, which indicates that the store in south Rochester will also be shuttered.
The company said that most of the 50 stores will be shuttered by May 12.
In addition to the big-box store closures, Best Buy's restructuring plans involve cutting 400 corporate positions, introducing a smaller “connected store” format, adding 100 Best Buy Mobile stores, and opening 50 new Five Star appliance stores in China.
Less than two weeks after announcing the restructuring plans, CEO Brian Dunn abruptly resigned, and G. Mike Mikan was named interim CEO.
The company said Thursday that its board is establishing a search committee to name a permanent CEO-and it will consider external and internal candidates, including Mikan, who has served on Best Buy's board since 2008.
Best Buy said it will interview six executive search firms and select one during the next few weeks to assist in the search process, which it expects to complete within six to nine months.
In the interim, Mikan has told Best Buy employees that the work being performed to address Best Buy's challenges “absolutely must continue.”
Following Dunn's resignation, news surfaced that the company's board is investigating allegations that Dunn used company resources to carry out an inappropriate relationship with a female employee.
But recent reports indicate that those concerns may represent the tip of the iceberg for Best Buy. The Star Tribune, which broke the news of the investigation into Dunn's conduct, recently reported that the company has hired “an elite legal team”-including a former U.S. attorney and a former top official with the U.S. Securities and Exchange Commission-to conduct the investigation. The lawyers' backgrounds and expertise suggest that the company's probe extends beyond Dunn's relationship with a female staffer, Angela Rud, a principal attorney with Gray Plant Mooty in Minneapolis, told the Minneapolis newspaper. (Read the full Star Tribune story here.)
In a separate report, the Minneapolis newspaper stated that some industry analysts have expressed concern about the insular nature of the company's board. They have reportedly also criticized business dealings involving six-figure jobs for family members of company founder and Chairman Richard Schulze, as well as real estate and corporate aviation agreements that direct close to $2 million annually to separate businesses owned by Schulze. (Read the full story here.)
The company also reportedly experienced a setback on Monday, when Fitch Ratings lowered Best Buy's debt outlook to negative, according to a report by the Pioneer Press. That news came less than two weeks after Standard & Poor's ratings services placed the electronics retailer's credit rating on watch “with negative implications,” meaning the company's credit rating could be downgraded.