Best Buy Cuts 2,400 More Jobs in Turnaround Effort
Richfield-based Best Buy Company, Inc., is eliminating 2,400 jobs companywide in its latest move to cut costs and turn the company around.
The cuts are related to a major restructuring plan outlined in March, but they are in addition to the 400 corporate job cuts announced at that time, Best Buy spokesman Bruce Hight told Twin Cities Business on Monday.
The 2,400 jobs include about 600 Geek Squad positions and roughly 1,800 Best Buy store employees, Hight said. The positions will be eliminated by August 1.
The company did not disclose how many of the layoffs will occur in Minnesota or the Twin Cities. Best Buy employs about 167,000 people globally, so the latest round of cuts represents about 1.4 percent of its work force. Affected employees are eligible for severance and job placement assistance, Hight said.
When the company announced plans to cut 400 jobs in March—and to close 50 big-box stores this year—it said those actions would result in $800 million in savings during the next three years. Hight didn’t disclose how much Best Buy expects to save from the latest 2,400 job cuts.
“These changes were previously announced as part of the leadership team’s ongoing turnaround plan,” Hight said in a prepared statement. “We are working to minimize the impact of the changes on employees while building the foundation for a strong future.”
Best Buy, which has been hurt by competition from Internet retailers like Amazon, experienced a 5.3 percent decline in same-store sales during its most recent fiscal quarter. Central to its restructuring plan is the shift away from big-box stores to a smaller, “connected store” format.
Last month, during the company’s annual meeting, interim CEO G. Mike Mikan told shareholders that Best Buy’s aim is to become “more relevant, more intelligent, and more nimble.” He said the company cannot be seen merely as a hardware retailer and must strengthen its technology expertise and improve customer experience.
Given those statements, some analysts were puzzled by Best Buy’s decision to eliminate Geek Squad positions, according to a report by the Star Tribune. The company is “cutting its best and brightest people at a time when the company is fighting for its future,” Burt Flickinger III, managing director of Strategic Resource Group consulting group in New York, told the Minneapolis newspaper.
The Pioneer Press, however, reported that the Geek Squad downsizing “appears to be mostly focused on repair positions, with fewer cuts to service operations.”
As Best Buy implements its restructuring plan, it has also experienced significant changes to its leadership team. The company saw an exodus of many key leaders this year, including Geek Squad founder Robert Stephens, and it recently doled out bonuses worth $10 million in an effort to retain its remaining key executives.
The company is still searching for a new chief executive to replace Brian Dunn, who stepped down in April amid an investigation that found that he violated company policy by engaging in a close personal relationship with a female employee.
The investigation also found that Chairman and founder Richard Schulze “acted inappropriately” when he failed to notify the company’s audit committee after learning about allegations of such a relationship. Schulze abruptly resigned from Best Buy’s board last month and began exploring options for his roughly 20 percent stake in the company. Shares of Best Buy’s stock jumped last Monday on speculation that Schulze may be close to making a buyout offer for the company, but a Reuters report indicated that such an offer is still a ways off, stifling the market’s momentum.
Best Buy’s stock price slid about 0.7 percent on Friday as news of the 2,400 layoffs surfaced. Shares were trading down about 2.8 percent at $20.99 mid-day Monday.
Best Buy is Minnesota’s third-largest public company based on revenue, which totaled $50.7 billion for the fiscal year that ended on March 3.