Best Buy furloughs 51,000 as curbside pickup, online demand can't offset retail foot traffic
Best Buy said it will furlough 51,000 store employees in the US including almost all part-time employees beginning April 19 as its sales have fallen due to closures to customer foot traffic.
The consumer electronics retailer, which will retain health benefits for furloughed employees, has closed some stores and used others for curbside pickup. CEO Corie Barry said Best Buy sales are 70% of what they were for the same period a year ago.
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In a statement, Barry said:
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. 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.
Best Buy reported a strong fourth quarter, but those results came ahead of the US COVID-19 response. Among the key figures:
- Sales for the 9-week period ended April 4 were down 5% from the same period a year ago.
- Quarter to date sales through March 20 were up 4%.
- For the 8-day period ended March 20, Best Buy saw a sales pop of 25% as people bought technology to help them work and learn from home.
- Demand for work-at-home technology and gaming gear is still strong, sales were down 30% from March 21 to April 11. Best Buy on March 22 closed domestic stories to customer traffic.
The Best Buy sales figures highlight a conundrum facing most enterprises that relied on foot traffic. Online sales, deliveries and curbside models have surged, but not enough to offset core sales in physical settings.
As for preserving cash, Best Buy said that it is retaining about 82% of full-time store and field employees on payroll including in-home advisors and Geek Squad agents. Barry will forgo 50% of her base salary and the board of directors will halve their retainer fees. Executives reporting to Barry will take a 20% cut in base salary through at least Sept. 1.
From there, Best Buy said it will cut inventory to match demand for essential items, extend payment terms with vendors, cut marketing spent and lower capital spending as well as 401(k) company matches.