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Best Buy furloughs 51,000 employees, updates earnings guidance

GaryPageau
Best Buy Co. Inc. announced business updates related to COVID-19 including, effective April 19, the temporarily furloughing of approximately 51,000 Domestic hourly store employees, including nearly all part-time employees. The company is retaining approximately 82% of its full-time store and field employees on its payroll, including the vast majority of In-Home Advisors and Geek Squad Agents. Furloughed employees will retain their health benefits at no cost to them for a minimum of three months, the company said.

Other actions:

  • Beginning April 19, some corporate employees are participating in voluntary reduced workweeks and resulting pay, as well as voluntary furloughs.
  • CEO Corie Barry will forego 50% of her base salary (about $800,000) and the members of the board of directors will forego 50% of their cash retainer fees through at least Sept. 1, 2020.
  • Company executives reporting directly to the CEO will take a 20% reduction in base salary through at least Sept. 1, 2020.
  • Lowering merchandise receipts to match demand with a focus on essential items for our customers
  • Extending payment terms in partnership with key merchandising vendors
  • Reducing promotional and marketing spend aligned with the temporary operating model
  • Lowering capital spend to focus on mandatory maintenance or high-value strategic areas
  • Suspending 401(k) company matching program
Corie Barry, Best Buy CEO

“The situation we are all facing as a result of the COVID-19 pandemic is truly unprecedented,” said Barry. “As we previously communicated, we made the decision for the health and safety of our customers and employees to shift our stores to a temporary enhanced curbside service-only model starting March 22. At that time, we also suspended all in-home delivery, installation, and repairs.

“I am so incredibly proud of our teams’ execution – they seamlessly implemented a new and highly effective operating model in a matter of 48 hours across our entire store base. We are fulfilling essential technology needs for customers in a safe and innovative way, including continuing to provide remote technical advice and support. This time of working, learning, cooking, entertaining and, importantly, connecting across the country from home only underscores our strategy and purpose: to enrich lives through technology.”

“We have retained approximately 70% of our sales compared to last year since moving to our enhanced curbside service model despite the fact that all our domestic stores are closed to customer traffic and approximately 40 of them, particularly in the Northeast, have been completely closed to all business for at least 10 days at our discretion,” Barry continued. “This is a testament to the strength of our multi-channel capabilities – as our domestic online sales are up over 250% and approximately 50% of these sales are from customers choosing to pick up their products at our stores since moving to our curbside service model.”

Sales update

Best Buy’s sales for the nine-week period ended April 4, 2020, declined approximately 5% on a year-over-year basis. The following provides additional information regarding estimated quarter-to-date results:

  • The company’s quarter-to-date sales through March 20, 2020, grew approximately 4% and were ahead of original expectations.
  • In the eight-day period ended March 20, 2020, sales grew approximately 25% as the company experienced a surge in demand across products that people need to work or learn from home, as well as those products that allow people to freeze food..
  • While the company is still seeing heightened demand for these products, as well as gaming products, the company’s year-over-year sales declined approximately 30% from March 21, 2020, when the company decided to close all of its domestic stores to customer traffic, through April 11, 2020.