Best Buy is taking several actions in response to the pandemic, temporarily furloughing some store employees, as sales remained mixed in March and April as the coronavirus spread.
The company’s sales for the 9-week period ended April 4, 2020, declined approximately 5% on a year-over-year basis. Quarter-to-date sales through March 20 grew approximately 4% and were ahead of original expectations. In the eight-day period ended March 20, sales grew approximately 25% as the company said it experienced a surge in demand across products that people need to work or learn from home, as well as those products that allow people to freeze food. While the company is still seeing heightened demand for these products, as well as gaming products, the company’s year-over-year sales declined approximately 30% from March 21, when the company shifted to an interim operating model and closed all of its domestic stores to customer traffic.
Corie Barry, CEO, Best Buy, 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. This is a testament to the strength of our multi-channel capabilities— as 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.”
Barry continued, “The situation remains very fluid and there is still a great deal of uncertainty, particularly as it relates to depth and duration of store closures and consumer confidence over time. We are taking the steps necessary to resume providing our customers in-home services in the near future, keeping in mind our overriding priority on the safety of our employees and customers. We are also preparing to re-open stores to customers as soon as it is safe to do so, with timing likely to vary at state and local levels. In the meantime, as you would expect, we are focused on making the difficult decisions necessary to ensure that at the end of this crisis Best Buy remains a strong, vibrant company.”
Beginning April 19, Best Buy is temporarily furloughing approximately 51,000 domestic hourly store employees, including nearly all part-time employees. The company is retaining approximately 82% of its full-time store and field employees on its payroll, including the vast majority of in-home advisors and Geek Squad agents. Furloughed employees will retain their health benefits at no cost to them for a minimum of three months.
Beginning April 19, some corporate employees are participating in voluntary reduced work weeks and resulting pay, as well as voluntary furloughs. CEO Barry will forego 50% of her base salary and the members of the board of directors will forego 50% of their cash retainer fees through at least September 1, 2020. Company executives reporting directly to the CEO will take a 20% reduction in base salary through at least September 1.
Other actions include lowering merchandise receipts to match demand with a focus on essential items for customers; extending payment terms in partnership with key merchandising vendors; reducing promotional and marketing spend aligned to temporary operating model; lowering capital spend to focus on mandatory maintenance or high-value strategic areas; and suspending 401(k) company matching program.