Best Buy increases digital review as the slowdown approaches

The electronics retailer has laid off employees and reduced the hours of some store employees in recent weeks. The company employed about 102,000 at the end of its last fiscal year, up from about 123,000 at the beginning of the year, Chief Executive Corie Barry said in a call with analysts on Thursday. The drop is mainly due to wear and tear, she said. Some 5,000 workers have been laid off or have chosen to seek compensation after cutting their working hours, she said.

The dismissed workers have until Friday to find another job at the company or to become eligible for severance pay, according to a “overview of the dismissal notification” 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 to reporters on Thursday. “We have done everything we can to adjust to the new reality.” After the busy holiday season, the company felt that “it needed to adjust our workforce to match this new reality”.

Traffic to stores and through online collection dropped about 15% during the three months ending January 30, she said, which means less need for sales staff at physical stores. In addition, the company is creating more part-time functions to increase flexibility, she said.

Comparable sales, from stores and digital channels in operation for at least 12 months, increased 12.6% in the three months ended on January 30. The company had reported a 23% sales increase in the previous fiscal quarter.

Executives warned on Thursday that growth is likely to slow in the second half of this year. They predict comparable sales between minus 2% and plus 1% for the new fiscal year. On this comparable basis, sales increased 9.7% in the fiscal year ended.

Shares fell more than 6% in Thursday’s mid-morning trading.

Best Buy is one of several companies that are trying to take advantage of the pandemic-driven changes in purchasing behavior and a huge increase in sales to accelerate a new strategy, sometimes with major implications for ordinary workers.

“As part of Best Buy’s Business Strategy, changes to our operating model and store personnel have been implemented to support how we serve customers where and when they need us, which is rapidly changing in today’s environment,” said “ overview of the notice of termination ”viewed by the newspaper.

Some store employees said the layoffs seemed counterintuitive after some quarters of strong growth and difficult conditions for employees. “The past six months have been tough,” said Richard Canepa, 23, who worked at a Best Buy in Louisiana for five years, most recently as a full-time sales consultant.

Mr. Canepa remained employed throughout the coronavirus pandemic, including working from home making sales over the phone. 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 accepted the compensation and said he hopes to get a job in web development.

Other retailers who reported strong sales during the pandemic made similar strategy acceleration plans. Walmart Inc.,

the country’s largest retailer by revenue, said last week it would increase investments in technology, e-commerce and automation after a year of sales conquered by Covid-19. This year “prepared us to take the company wherever we want and do it ahead of schedule,” said Walmart’s chief financial officer, Brett Biggs, in an interview last week. Walmart is giving hikes to some employees, such as gondola stockists and store employees who collect orders online, while leaving the minimum wage of $ 11 an hour for others.

Best Buy experienced a more marked shift to online shopping during the pandemic than retailers selling groceries or other products that customers still tend to want to touch and feel. In the last fiscal quarter, its online sales increased by almost 90%, to $ 6.7 billion, and represented 43% of total sales in the United States, almost double compared to the same period last year.

During the pandemic, the company accelerated the collection on the sidewalk of online orders and transferred more store space for storage and fulfillment operations.

Part of the company’s strategy is to train more store employees to do multiple tasks, so that they can easily switch tasks or take shifts across multiple stores. More than half of the workers were trained to “work in different work zones,” said Barry, the CEO, in November, and some may add shifts by delivering at home or working in different stores.

After reducing his workforce last fiscal year, “from here, the question is how our employees can choose from a variety of skills and certifications so they can find the customer where they are going,” said Barry on Thursday.

Workers have moved on to make 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, she said.

Store and regional managers have known for more than a year that a change in strategy is coming, said a store manager at Best Buy. Still, the fast pace of the new strategy, its time and workers targeted by layoffs has hit store morale, said this person.

“The holidays were difficult,” said this manager. “We were working at uncertain times. We were working with potentially infected customers, potentially infected employees. I made the employees resign, the managers resigned for no other reason than to think they were going to die. “About a dozen workers were laid off at that person’s store, most of them full-time employees,” said the manager.

“Our stock [price] was firing, ”said the manager. “That’s why we were so shocked that they decided to do these layoffs.”

Like other retailers, Best Buy gave workers a series of bonuses during the pandemic. He raised the starting wages of 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 day of paid vacation as a reward if they are vaccinated against Covid-19, as well as paid sick leave after vaccination, if necessary.

Once the pandemic hit, Best Buy moved quickly to save money, said current and former executives. At the end of last year, the company offered early retirement packages to all corporate employees over 55, below the traditional 60-year limit, some of them said. Best Buy closed its stores to everyone except for the sidewalk pickup at the beginning of the pandemic and, in April, released about 51,000 workers, including almost all part-time employees.

In June, it started bringing back some of these workers, but in some cases it shifted its functions to online service or to answering customer service questions from their homes.

Some chains did not do so well with the pandemic and electronics retailers have been struggling for years as more online shopping has changed. This week, Fry’s Electronics Inc. said it was closing its doors, permanently closing all 30 stores and closing its operations.

Write to Sarah Nassauer at [email protected]