Best Buy: Can it weather the recession?
We'd like to imagine our hometown baby, Best Buy, is invincible while most companies aren't making it through these terrible economic months unscathed. We were wrong. Best Buy announced a huge call to employees to take voluntary buyouts. Presumably they will do it for them if no one steps up to the plate.
Richfield-based Best Buy announced a huge call for voluntary buyouts for nearly all of their 4,000 employees at the main headquarters. The buyouts are one step to "reduce significant expense from its corporate payroll,"the Star Tribune says
The company would not say how many jobs it was hoping to cut, but employees from hourly wage earners to executive vice-presidents are eligible to take the buyouts, which were sweetened with additional pay depending on age and time of service.
"This isn't just an issue with Best Buy," said Marshal Cohen, chief retail analyst for market research firm NPD Group in New York. "It's a sign of the challenge that retailers are facing as a whole. Holiday numbers aren't coming in and discounts have to be deeper than expected. It makes payroll a very challenging issue."
This morning, the company's finances for the last quarter sounded terrible based on headlines reported across the country: "Best Buy earnings drop 77 percent".
The Richfield-based electronics retailer's profits fell to $52 million, or 13 cents per share, in the three months ending Nov. 29.
In the third quarter of last year, Best Buy posted profits of $228 million, or 53 cents per share. Same-store sales of locations open longer than 14 months fell 5.3 percent during the quarter. Total revenue rose to $11.5 billion third quarter, compared to $9.9 billion one year ago, in part because of revenue reports from Best Buy Europe and gains from 181 new stores.
Best Buy's CEO, Brad Anderson, said the third quarter of this year was the "most challenging environment our company has ever faced," and warned that dramatically curtailed consumer spending habits could be long-lasting.
We're no business experts, but $52 million in profits during a tough season sounds pretty solid to us. Perhaps Best Buy has been living a dream where lounging in mountains of money was part of the lifestyle. For the business-savvy out there, is Best Buy doing OK?
Get the This Week's Top Stories Newsletter
Every week we collect the latest news, music and arts stories — along with film and food reviews and the best things to do this week — so that you’ll never miss City Pages' biggest stories.