Best Buy Furloughs 51,000 Workers, Takes Other Cost-Saving Measures
In an announcement that seemed inevitable now that its nearly 1,000 stores have been closed to shoppers for nearly a month, Best Buy on Wednesday said that it will furlough approximately 51,000 hourly store employees and nearly all part-time employees beginning April 19.
“We prolonged this decision as long as we could,” CEO Corie Barry said in a video statement on the retailer’s website. Barry will forgo 50 percent of her $1.16 million base salary for the rest of the year and the cash retainer fees for Best Buy board members will be cut in half at least through September 1. Barry’s direct reports will take a 20 percent salary reduction for that same time period.
Best Buy’s sales declined approximately 5 percent year-over year for the for the 9-week period that ended April 4. The Richfield-based company provided additional numbers that point to the wild ride many retailers have experienced since the coronavirus pandemic hit: a 25 percent sales surge in mid-March leading up to stay-at-home orders; followed by a 30 percent decline in sales when Best Buy’s nearly 1,000 U.S. stores closed and shifted to curbside pickup only on March 22.
Since then, domestic online sales are up 250 percent. About half of customers are choosing curbside pickup rather than delivery. Overall, Best Buy has retained approximately 70 percent of sales.
“Seventy percent is quite an achievement given that we’ve gone from being a retailer with nearly 1,000 stores to one that does all of its business online,” Barry said. “But 70 percent also means that we are losing 30 percent of our normal business. This means we cannot operate normally for very long or we risk harming the company.”
Other actions Best Buy announced on Wednesday include:
- Lowering merchandise receipts to match demand with a focus on essential items for our customers
- Requesting payment extensions with key merchandising vendors
- Reducing promotional and marketing spending
- Lowering capital spend to focus on mandatory maintenance or high-value strategic areas
- Suspending 401(k) company matching program
Furloughed employees will receive one more paycheck and retain their health benefits at no cost for a minimum of three months.
Best Buy partnered with founder Dick Schulze to establish a $10 million employee assistance fund available to all part- and full-time hourly employees who have been with the company longer than one year. Best Buy’s portion was paid by repurposing the majority of its annual corporate giving budget.
“We’re purposeful in using the world furlough,” Barry said, emphasizing that she hopes most if not all of its frontline employees will return to work eventually.
“We believe our mission is to enrich lives through technology,” Barry said. “And that has never been more vital than in the dark days of this pandemic as people literally work, learn, cook, entertain, and most importantly, connect using the technology in their homes.”