FILE -- Nov. 2010: In this photograph taken by AP Images for Best Buy, Brian Dunn greets shoppers waiting for the Eden Prairie Best Buy to open for Black Friday.

Craig Lassig, Associated Press

Best Buy investigating Dunn’s conduct with female staffer

  • Article by: THOMAS LEE
  • Star Tribune
  • April 12, 2012 - 7:03 AM

Best Buy's board of directors is investigating allegations that former CEO Brian Dunn, who abruptly resigned Tuesday, used company resources to carry out an inappropriate relationship with a female employee, the Star Tribune has learned.

Asked multiple times to respond to the allegations regarding Dunn, Best Buy representatives declined to comment. Asked directly Wednesday whether the company wanted to challenge the Star Tribune's reporting, the company declined.

"As we have said, the investigation is ongoing. We have no additional comment at this time," said Greg Hitt of Public Strategies Inc., who is acting as a spokesman for Best Buy.

According to a source close to Best Buy, the company is investigating multiple complaints that Dunn behaved inappropriately with a female subordinate. Dunn, a Best Buy veteran who started with the company in 1985 as a salesman, has not responded to phone calls and other efforts to reach him for comment.

On Tuesday, Best Buy said that Dunn had resigned by "mutual agreement," less than two weeks after he announced the largest restructuring plan in the company's history, which included store closures, layoffs and other cost reductions. In response to a Star Tribune inquiry Tuesday, Best Buy acknowledged that the board of directors audit committee, which normally oversees the company's finances, was investigating Dunn's "personal conduct."

Dunn took over as Best Buy's CEO in June 2009, replacing Brad Anderson, who had served in that role for seven years before retiring. When contacted Wednesday, Anderson left open the possibility that he could return to the company if asked.

Anderson told the Star Tribune that he would not pursue his old job. However, when asked whether there was a scenario in which Best Buy could retain his services, Anderson didn't rule it out.

"I would be hard-pressed to do something that was not in the best interest of the company," he said. "I don't know."

Caught off guard

In March, Dunn said he was determined to lead the company through the deepest restructuring in its history -- a plan which included closing 50 big-box stores across the country and eliminating $800 million in costs over the next three years. Anderson said he hasn't spoken to Dunn in a while and was caught off guard by the resignation.

"I was very surprised that Brian was leaving the company in the middle of the transformation," Anderson said.

Anderson enjoyed a successful 36-year career at Best Buy, the nation's largest electronics retailer. He became the key driver for the company's shift away from a strategy that pushed high-tech gadgets to one in which consumers' needs become the core focus -- a mission it called "customer centricity."

The strategy led Best Buy to expand its Geek Squad computer services as well as add a host of other services -- from installing home-theater systems to setting up smartphones in stores.

Under Anderson's leadership, Best Buy's annual sales increased from $17.7 billion in fiscal 2002 to $40 billion in 2008. Earnings grew at an average of 16.5 percent a year. The company expanded from almost 600 stores in North America in fiscal 2002 to nearly 3,900 locations in 13 countries. Since Anderson stepped aside, the company's stock has tumbled 35 percent.

Anderson said it has pained him to watch the company, based in Richfield, struggle the past three years. Best Buy has faced tough times before, but "I wasn't watching from the sidelines," he said.

Moving forward

Already, analysts have thrown out a number of names as candidates to replace Dunn, including former Best Buy executive and current Advance Auto Parts CEO Darren Jackson, former Williams-Sonoma chief financial officer Sharon McCollam and former RadioShack CEO Julian Day.

McCollam is known for helping Williams-Sonoma build a successful online business. Day's expertise is cost- cutting, something that might complement Best Buy's plans to reduce expenditures.

In a memo sent to employees Wednesday, interim CEO G. "Mike" Mikan acknowledged Dunn's resignation was a distraction to the company.

"I know the news of Brian's departure was a surprise ... [and] likely raised additional questions for many of you," Mikan wrote. "I'm very aware that was difficult to read and experience."

With that said, Mikan said, the company is moving forward. In addition to the previously announced restructuring plan, Mikan said the senior executives are developing a new "blueprint for growth."

"This blueprint will be a longer-term plan designed to capitalize on the actions we are already implementing," Mikan wrote, "and position Best Buy for sustained, profitable growth in the years ahead."

Thomas Lee • 612-673-4113

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