Best Buy, Target Eye Additional Corporate Cuts28 Jan, 2009 By: Erik Gruenwedel
Best Buy Co. said it would begin initiating additional layoffs at its Minneapolis headquarters next month.
Details regarding the new cuts, including number of positions affected, will be disclosed Feb. 19, according to Best Buy spokesperson Sue Bush Nehring.
Citing a bleak retail landscape for the foreseeable future, the No. 1 consumer electronics retailer late last year offered incentive-laden voluntary terminations to its 4,000 corporate employees, which 500 staffers accepted.
“[Best Buy] tried to be innovative and thoughtful to employees by offering the voluntary packages," Brad Thomas, analyst with KeyBanc Capital Markets, told Reuters. "Given the weak sales environment, it's really not a surprise that involuntary cuts are coming.”
Michael Lasser, analyst with Barclays Capital, welcomed the cuts by upgrading Best Buy shares from “equal weight” to “overweight.” In a research note, Lasser said Best Buy would increase sales $2.5 billion with the demise of rival Circuit City.
Separately, Target Corp., one of the larger retailers of DVD and Blu-ray movies, said it would eliminate 600 corporate jobs and not fill an additional 400 positions at its New York headquarters. The retailer said it would also shutter a Little Rock, Ark.-based distribution center idling 500 workers.
Target operates 1,682 stores in 48 states and 34 distribution centers, and the company employs approximately 350,000 people worldwide.
"We are clearly operating in an unprecedented economic environment that requires us to make some extremely difficult decisions to ensure Target remains competitive over the long term," said Gregg Steinhafel, president and CEO of Target, in a statement.
The news comes as the Consumer Electronics Association and The Conference Board said in a report that consumer confidence continued to freefall in January due to concerns about job insecurity.
The report, compiled together with CNET, found that consumer confidence slipped 1.3 points from December and 4.2 points from January 2008.
“Consumer confidence continues to decline despite the enthusiasm around the recent shift in administration,” said Claudia Haase, CNET’s director of research. “It is clear that consumers continue to worry about job losses, a volatile stock market and a deepening recession.”
Haase said the decline indicated that while consumers are still shopping for electronics, they are more selective in their purchases.