Analysis: Wanted at Best Buy: An outsider with gumption

Sun Apr 15, 2012 10:20am EDT
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By Dhanya Skariachan

NEW YORK (Reuters) - In order to regain Wall Street's confidence, Best Buy Co Inc (BBY.N: Quote) will likely have to pick an outsider to run the world's largest consumer electronics retailer for the first time in its 46-year history.

While lawyers and a board committee are investigating allegations of personal misconduct that led to the abrupt resignation of Best Buy Chief Executive Brian Dunn earlier this week, investors, analysts and retail consultants are focusing on the search for his replacement.

They want to see a fresh face at the retailer, which has lost many of its customers to Inc (AMZN.O: Quote) and Wal-Mart Stores Inc (WMT.N: Quote), which are often able to offer cheaper prices on gadgets.

"I do think you want someone at the top that can bring a bit of different viewpoint, that can shake things up," said Connor Browne, portfolio Manager of the Thornburg Value Fund, which owns Best Buy shares.

Part of what the new CEO will need to do is to be tougher in trying to control the practice of "showrooming," in which shoppers come to Best Buy to check out televisions and other electronics and then buy them for less online - sometimes using their mobile phones while still standing in the store.

"We do think that Best Buy's leadership hasn't done a good enough job of being tough on the vendors when it comes to their products being available online at lower prices on Amazon," Brown said.

Best Buy's board said on Thursday that it was looking at both internal and external candidates, including current interim CEO G. Mike Mikan, to replace Dunn. The company said the search could take six to nine months.

Gamestop Corp (GME.N: Quote) CEO Paul Raines or Advance Auto Parts Inc (AAP.N: Quote) CEO Darren Jackson, could be candidates for the top job, said Anthony Chukumba at BB&T Capital Markets, which makes a market in Best Buy.   Continued...

The inside of a Best Buy store is seen in New York, March 26, 2012. REUTERS/Shannon Stapleton