Struggling electronics retailer Best Buy Co. Inc. said Tuesday that it is cutting 400 employees at its Richfield, Minn., headquarters in an effort to save $150 million.
Most of the savings won’t come from salaries, according to a company statement, and for now, the so-called Blue Shirt sales associates are protected from the ax. No store closures are planned ... yet.
Why all the caveats? Tuesday’s reductions -- Best Buy’s way of “enhancing the focus on the company’s core business, removing management layers and eliminating operational inefficiencies" -- is just the first phase of several.
In what the company is calling its “Renew Blue” transformation, which Chief Executive Hubert Joly discussed in November, Best Buy ultimately plans to shave about $725 million in costs.
Additional reductions are to come during the year, according to the statement from the company, which is reporting its fourth-quarter earnings later this week.
[Updated, 9:40 a.m., Feb 26: Joly joined the company in August -- Best Buy's third chief executive in six months. He succeeded G. Mike Mikan, a board member who served as the interim head honcho after his predecessor, Brian Dunn, stepped down following an inappropriate relationship with a female employee.
Founder and former chairman Richard Schulze also left his post, but has since indicated that he hopes to buy out the company. He has until the end of the week to make an offer.
With more online retailers -- Amazon chief among them -- offering bargains on electronics, Best Buy has fought to hang on to its clientele. Earlier this month, the company said it will offer a low-price guarantee in stores and online starting March 3, matching nearly all prices from local rivals and 19 major online competitors.
The hope is to stop a phenomenon known as “showrooming,” in which shoppers try out products in physical stores and then hunt for discounts online. The tactic likely contributed to Best Buy’s sliding holiday sales, which fell 1.4% at stores open at least a year for the nine weeks ended Jan. 5.]
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