Best Buy Co.
He said sales spiked in the holiday season as homebound consumers splurged on televisions and other electronic devices, but he warned that his steamy growth would slow this year and said he has prompted plans to prepare the business for a more digital future.
The company is accelerating its plan to adapt to what executives think is a longer-term shift toward online shopping and virtual technology services, including reducing its in-store workforce and using more space. in-store to fulfill online orders.
The electronics retailer has been laying off workers and cutting hours for some store workers in recent weeks. The company employed about 102,000 at the end of its last fiscal year, down from 123,000 at the beginning of the year, CEO Corie Barry said in a call with analysts Thursday. The decline is mainly due to attrition, he said. About 5,000 workers were laid off or decided to take severance after their hours were cut, he said.
The laid off workers have until Friday to find another position at the company or be eligible for severance pay, according to an “overview of severance notice” given to some workers and seen by The Wall Street Journal.
“The customer has completely changed the way they think about shopping,” Barry said in a call with reporters Thursday. “We have been doing everything possible to adapt to the new reality.” After the busy Christmas season, the company felt it “needed to adjust our workforce to accommodate this new reality.”
Traffic to stores and through online pickup declined about 15% during the three months ending January 30, he said, meaning less need for sales personnel in physical stores. Additionally, the company is making more roles from full-time to part-time for flexibility, he said.
Comparable sales, those of stores and digital channels operating for at least 12 months, increased 12.6% in the three months ended January 30. The company had reported a 23% increase in sales in the previous fiscal quarter.
Executives warned Thursday that growth is likely to slow in the second half of this year. They forecast comparable sales between minus 2% and plus 1% for the new fiscal year. On that comparable basis, sales increased 9.7% in the fiscal year that just ended.
The stock was down more than 6% as of mid-morning Thursday.
Best Buy is one of several companies trying to take advantage of pandemic-driven changes in buying behavior and a large increase in sales to accelerate a new strategy, sometimes with big implications for grassroots workers.
“As part of Best Buy’s business strategy, changes were made to our store’s staffing and operating model to support the way we meet customers where and when they need us, which is rapidly changing in the world. current environment, “said the” general description of the notice of dismissal “that is by the Magazine.
Some store workers said the layoffs seemed counterintuitive after a few quarters of strong growth and tough conditions for employees. “The last six months have been difficult,” said Richard Canepa, a 23-year-old who has worked at Best Buy in Louisiana for five years, most recently as a full-time sales consultant.
Canepa remained employed during the coronavirus pandemic, including working from home doing phone sales. Earlier this month, the company gave him the option to move to a part-time position, which would mean losing his health insurance, he said. Instead, he took severance and said he hopes to get a job in web development.
Other retailers that reported strong sales during the pandemic have developed plans to accelerate similar strategies. Walmart Inc.,
The nation’s largest retailer by revenue, said last week that it would boost investments in technology, e-commerce and automation after a year of sales driven by Covid-19. This year “has prepared us to take the company where we want to take it and do it ahead of schedule,” Walmart CFO Brett Biggs said in an interview last week. Walmart is giving raises to some workers, such as warehouse workers on shelves and store workers who collect orders online, while leaving its minimum wage at $ 11 an hour for others.
Best Buy has seen a more marked shift toward online shopping during the pandemic than retailers selling groceries or other products that shoppers still tend to want to touch and feel. In the most recent fiscal quarter, its online sales increased nearly 90% to $ 6.7 billion and accounted for 43% of total sales in the United States, almost double compared to the same period last year.
During the pandemic, the company increased curbside online order picking and moved more store space to warehousing and fulfillment operations.
Part of the company’s strategy is to train more store-level personnel to perform multiple jobs, so that they can easily switch tasks or take shifts across multiple stores. More than half of the workers had been trained to “adapt to different work zones,” Ms Barry, CEO, said in November, and some may add shifts by making home deliveries or working in different stores.
After reducing its workforce last fiscal year, “from here on, the question is how can our employees go through various skills and certifications so that they can find the customer where they go,” Barry said Thursday.
Workers switched to do more virtual sales, as well as chat, phone and remote support, Barry said on Thursday’s call. The company is hiring more people in areas such as supply chain, small package delivery and technology, he said.
Store and regional managers have known for more than a year that a change in strategy is coming, said a Best Buy store manager. Still, the fast pace of the new strategy, its timing, and the workers being laid off have affected store morale, this person said.
“The holidays were difficult,” said this manager. “We were working uncertain hours. We were working with potentially infected clients, potentially infected employees. I made the employees quit, the managers quit for no other reason than to think they were going to die. ” About a dozen workers were laid off at this person’s store, most of them full-time employees, the manager said.
“Our inventory [price] it was going off, ”said the manager. “That’s why we were so surprised that they decided to make these layoffs.”
Like other retailers, Best Buy gave workers a series of bonuses during the pandemic. It raised starting wages for American workers to $ 15 last August. Earlier this week, he said he would give another round of bonuses to workers, including those who were recently laid off. It is also offering workers a paid vacation day as a reward if they are vaccinated against Covid-19, as well as paid sick leave after vaccination if necessary.
As soon as the pandemic hit, Best Buy acted quickly to save cash, current and former executives said. Late last year, the company offered early retirement purchase packages to all corporate employees 55 and older, below the traditional threshold of 60, some of these people said. Best Buy closed its stores to all but curbside pickup early in the pandemic and laid off about 51,000 workers in April, including nearly all part-time employees.
In June, he began bringing some of those workers back, but in some cases shifted his duties to online fulfillment or answering customer service questions from home.
Some chains have not fared as well during the pandemic, and e-retailers have struggled for years as online shopping increased. This week, Fry’s Electronics Inc. said it was closing, permanently closing all 30 stores and shutting down its operations.
Write to Sarah Nassauer at [email protected]
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