Best Buy on Wednesday announced the furlough of about 51,000 U.S. hourly store workers, including nearly all those working part-time, starting April 19, according to a company press release. Furloughed employees retain health benefits at no cost to them for at least three months. Eighty-two percent of full-time store and field employees remain on the payroll, including "the vast majority of In-Home Advisors and Geek Squad Agents."
Also beginning April 19, some corporate employees are voluntarily reducing workweeks and pay and taking voluntary furloughs. From then to 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.
Other measures designed to blunt the impact of the COVID-19 pandemic on sales and finances include taking in less inventory, with a priority on essential items; extending payment terms with key vendors; reducing marketing spend; and limiting capital spending to "mandatory maintenance or high-value strategic areas."
Best Buy in recent years beat back a challenge from Amazon — which for a while seemed destined to take much more of its market share — by pivoting to a high-touch service model dependent on in-store and in-home interactions.
Its fourth-quarter sales increased 2.7% year over year to $15.2 billion as store comps rose 3.2%, its 12th straight quarter of comparable sales growth.
But that otherwise successful approach doesn't work well during this time when a pandemic has forced people to keep their distance from each other and stores to close. Still, Barry said Wednesday that, thanks to an already strong store-based fulfillment system, the electronics retailer has managed to retain some 70% of its sales year over year, by shifting to curbside pickup for many orders. So far this year, Best Buy's online sales have shot up more than 250%, and half of those orders are picked up from stores, she said.
Sales have beat the company's own expectations in some measures, including a 4% quarter-to-date sales increase through March 20. In the eight days before then, sales rose about 25% as demand surged for products for working at home, freezing food and gaming. Still, while demand remains up to some extent, sales have fallen about 30% year over year since the retailer closed all its U.S. stores on March 21, the company said.
That's also when Best Buy withdrew its previous guidance for the year, suspended all share repurchases and drew its entire $1.25 billion revolving credit facility, the company noted in its release.
The company said a $10 million assistance fund, contributed to equally by the corporate charity budget and founder Dick Schulze, has been established to help part-time or full-time hourly workers who've been with the company longer than a year.