Best Buy Stock Drops as CEO Announces Store Closings, Layoffs
Best Buy announced during its quarterly earnings meeting yesterday that it will close more stores than usual in 2021, USA Today reports. In the past two years, the store has closed 20 large-format locations, and CEO Corie Barry stated the electronics retailer will “expect to close a higher number this year.” The store has an average of 150 leases coming up for renewal per year over the next three years. “We have also been reducing the length of our average lease term, which will continue to provide us flexibility,” Barry said during the meeting.
Although online sales increased by 89% from November 2020 through January 2021, overall sales fell short of expectations. The company projected sales growth of $17.23 billion but only reached $16.9 billion for the year. Best Buy Chief Financial Officer Matt Bilunas stated that same-store sales for 2021 could range from gains of 1% to a drop of as much as 2%, CNBC reports.
More Lay-Offs on the Horizon
While Best Buy benefited from sales of computers, large-screen HDTVs and other electronics as people stayed home during the pandemic, the increase in online shopping forced the retailer to lay off or retrain workers.
In 2020, the company’s workforce dropped by 17%, from 123,000 employees to 102,000, CNBC says. Additionally, Barry revealed plans to replace 5,000 full-time employees with 2,000 part-time workers, according to USA Today. The company will also focus on training employees to fulfill online orders, USA Today writes.
In August, Best Buy raised its starting hourly wage to $15 an hour, the same rate paid by Target and Amazon, USA Today reports. Barry said in the meeting that it has paid employees a “cash gratitude bonus” of $500 for full-time workers and $200 for part-time employees.
Best Buy Stock Drops
Following the earnings call, Best Buy stock (NYSE: BBY) dropped $10.52 to just under $103 per share at market close, a dip of 9.27%. Other big box retailers, including Walmart, Target, Home Depot and Lowe’s, also saw losses yesterday, with the Dow falling 1.75%, or nearly 560 points. However, Best Buy took a bigger hit than the others.
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