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Best Buy to Furlough 51,000 Staff on Rising Coronavirus Woes
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Best Buy Co., Inc. (BBY - Free Report) provides more details on actions in the wake of heightened uncertainty tied to the coronavirus pandemic. The actions include furloughing associates, pay cuts and lowering of expenses. Simultaneously, the company has provided sales data.
The consumer electronics goods’ retailer said that it has decided to temporarily furlough about 51,000 hourly store employees, starting Apr 19. This furlough includes almost the entire part-time staff. However, the furloughed employees will continue to get health benefits. The company has decided to retain nearly 82% of the full-time store and field associates on payroll, consisting of majority of the In-Home Advisors and Geek Squad Agents. Best Buy has teamed up with its founder, Dick Schulze, to support workers amid such trying times. It plans to establish a $10-million fund for all part- and full-time staff working for more than a year.
Best Buy is also looking to retain its financial strength. To this end, the company’s measures include reducing merchandise receipts, extending payment terms, cutting capital spend, and curbing promotional and marketing expenditure. It has also decided to suspend the 401(k) company matching program. In addition, the company’s CEO will forego half of base salary while its board members have agreed to waive 50% of the cash retainer fees through at least Sep 1, 2020. The executives reporting directly to CEO will have a 20%-cut in base salary through at least Sep 1. The retailer had drawn the total amount of $1.25 billion under its revolving credit facility. As of Mar 19, 2020, the company had roughly $2 billion in cash and cash equivalents.
Management further informed that it is looking to resume its in-home services in the near term, and re-open stores when it is safe. Prior to this release, Best Buy announced suspension of all in-home installation and repair services, while the in-home consultations are conducted virtually. Further, the company withdrew guidance for first quarter and fiscal 2021, in response to the increasing uncertainty and changes in its operations due to the coronavirus crisis. It has also put all share buybacks on hold.
Sales Data
Coming to Best Buy’s top-line performance, we note that its sales for the nine-week period ending Apr 4 fell nearly 5% year over year. However, quarterly sales through Mar 20 surpassed expectations and increased roughly 4%. In the eight-day period ending Mar 20, the company’s top line rose 25% due to higher demand for products that people require to work or learn from home. Although the company is still witnessing increased demand for these products as well gaming products, sales tumbled nearly 30% year over year from Mar 21 through Apr 11.
Best Buy has also enhanced curbside service model in the meantime, thus enabling customers to purchase items online. Impressively, the company is able to retain about 70% of sales versus last fiscal owing to its robust curbside service model when all its stores are shuttered. Its domestic online sales grew more than 250%. Further, this Zacks Rank #2 (Buy) company is committed toward catering to consumers’ technology needs. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Richfield, MN-based company has lost 28% in the past three months, while its industry declined 41.2%.
Other Retailers’ Actions
Retailers have been largely facing the brunt of the alarming spread of COVID-19. They are resorting to proactive actions to sail through this rough patch. Women’s apparel retailer, L Brands suspended quarterly dividend, cut down on capital expenditures and drew $950 million from the revolving credit facility. It has also temporarily reduced base compensation by 20% for senior vice presidents, deferred annual merit increases and furloughed majority of its store associates effective Apr 5, till further notice.
Renowned omni-channel retailer, Macy’s (M - Free Report) has suspended second-quarter fiscal 2020 dividend and lowered capital expenditures for the current fiscal year. The company has also chosen to access the $1.5 billion available under its revolving credit facility. Apparel and accessories dealer, Tilly's (TLYS - Free Report) has borrowed $23.7 million under its credit facility, shut down the distribution center in Irvine, CA, and furloughed most of its associates. It has also recognized additional cost reductions for fiscal 2020.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Best Buy to Furlough 51,000 Staff on Rising Coronavirus Woes
Best Buy Co., Inc. (BBY - Free Report) provides more details on actions in the wake of heightened uncertainty tied to the coronavirus pandemic. The actions include furloughing associates, pay cuts and lowering of expenses. Simultaneously, the company has provided sales data.
The consumer electronics goods’ retailer said that it has decided to temporarily furlough about 51,000 hourly store employees, starting Apr 19. This furlough includes almost the entire part-time staff. However, the furloughed employees will continue to get health benefits. The company has decided to retain nearly 82% of the full-time store and field associates on payroll, consisting of majority of the In-Home Advisors and Geek Squad Agents. Best Buy has teamed up with its founder, Dick Schulze, to support workers amid such trying times. It plans to establish a $10-million fund for all part- and full-time staff working for more than a year.
Best Buy is also looking to retain its financial strength. To this end, the company’s measures include reducing merchandise receipts, extending payment terms, cutting capital spend, and curbing promotional and marketing expenditure. It has also decided to suspend the 401(k) company matching program. In addition, the company’s CEO will forego half of base salary while its board members have agreed to waive 50% of the cash retainer fees through at least Sep 1, 2020. The executives reporting directly to CEO will have a 20%-cut in base salary through at least Sep 1. The retailer had drawn the total amount of $1.25 billion under its revolving credit facility. As of Mar 19, 2020, the company had roughly $2 billion in cash and cash equivalents.
Management further informed that it is looking to resume its in-home services in the near term, and re-open stores when it is safe. Prior to this release, Best Buy announced suspension of all in-home installation and repair services, while the in-home consultations are conducted virtually. Further, the company withdrew guidance for first quarter and fiscal 2021, in response to the increasing uncertainty and changes in its operations due to the coronavirus crisis. It has also put all share buybacks on hold.
Sales Data
Coming to Best Buy’s top-line performance, we note that its sales for the nine-week period ending Apr 4 fell nearly 5% year over year. However, quarterly sales through Mar 20 surpassed expectations and increased roughly 4%. In the eight-day period ending Mar 20, the company’s top line rose 25% due to higher demand for products that people require to work or learn from home. Although the company is still witnessing increased demand for these products as well gaming products, sales tumbled nearly 30% year over year from Mar 21 through Apr 11.
Best Buy has also enhanced curbside service model in the meantime, thus enabling customers to purchase items online. Impressively, the company is able to retain about 70% of sales versus last fiscal owing to its robust curbside service model when all its stores are shuttered. Its domestic online sales grew more than 250%. Further, this Zacks Rank #2 (Buy) company is committed toward catering to consumers’ technology needs. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Richfield, MN-based company has lost 28% in the past three months, while its industry declined 41.2%.
Other Retailers’ Actions
Retailers have been largely facing the brunt of the alarming spread of COVID-19. They are resorting to proactive actions to sail through this rough patch. Women’s apparel retailer, L Brands suspended quarterly dividend, cut down on capital expenditures and drew $950 million from the revolving credit facility. It has also temporarily reduced base compensation by 20% for senior vice presidents, deferred annual merit increases and furloughed majority of its store associates effective Apr 5, till further notice.
Renowned omni-channel retailer, Macy’s (M - Free Report) has suspended second-quarter fiscal 2020 dividend and lowered capital expenditures for the current fiscal year. The company has also chosen to access the $1.5 billion available under its revolving credit facility. Apparel and accessories dealer, Tilly's (TLYS - Free Report) has borrowed $23.7 million under its credit facility, shut down the distribution center in Irvine, CA, and furloughed most of its associates. It has also recognized additional cost reductions for fiscal 2020.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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