Best Buy is furloughing about 51,000 hourly store employees, including nearly all part-timers, as it seeks to reduce costs during the COVID-19 pandemic.
The consumer electronics giant said it is keeping 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. The furloughed employees, which include nearly all part-timers, will retain their health benefits at no cost to them for a minimum of three months. (Best Buy had nearly 125,000 full-time, part-time and seasonal employees in the U.S., Canada and Mexico, at the end of fiscal 2020, according to an annual filing.)
Also, beginning April 19, some Best Buy corporate employees are voluntarily reducing work weeks and pay and taking voluntary furloughs. From then until at least Sept. 1, CEO Corie Barry will take half her base salary, executives reporting directly to her will take a 20% cut, and board members will take 50% of their retainer fees. The company is also suspending its 401(k) matching program. (See end of article for other new cost-saving measures announced by Best Buy.)
The consumer electronics giant said its quarter-to-date sales through March 20 were up 4%, ahead of expectations. Sales surged 25% in the eight-day period ended March 20 amid increased demand across products that people need to work or learn from home, as well as products that allow people to freeze food.
Best Buy said it continues to experienced heightened demand for those products, along with gaming products. But year-over-year sales fell 30% from March 21, when the company closed all its domestic stores to customer traffic and pivoted to a temporary curbside pickup model as a safety measure for employees and customers. (Orders can also be shipped directly to homes.)
Best Buy’s online sales in the U.S. are up more than 250% over the year-ago period. About half of the online sales were picked up at its stores.
“We have retained approximately 70% of our sales compared to last year since moving to our enhanced curbside service model, said Best Buy CEO Corie Barry. “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.”
Barry noted that there is still a great deal of uncertainty, particularly as it relates to depth and duration of store closures and consumer confidence over time. She added that the company hopes to resume making in-home deliveries, installations and repairs — which were suspended at the same time as stores were closed — in the “near future.”
"We are also preparing to re-open stores to customers as soon as it is safe to do so, with timing likely to vary at state and local levels,” she said.
Other measures taken by Best Buy to minimize financial fallout from the COVID-19 breakout include:
- 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 to temporary operating model; and,
- Lowering capital spend to focus on mandatory maintenance or high-value strategic areas.
Best Buy has partnered with its 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 and Schulze shared equally in the creation of the fund and the company’s portion was paid by repurposing the majority of its annual corporate giving budget.