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Economy

Best Buy cost cutting- 400 jobs axed – BBY, WMT, DB & AMZN

February 27, 2013 by Melissa Michaels in Economy, Market with 0 Comments

Northern, WI 02/27/2013 (gdpwatch) – The economy is playing havoc with every sector and Best Buy Co., Inc (NYSE:BBY) is no exception. The world’s largest consumer electronics retailer laid- off 400 employees at its headquarters. Hubert Joly, Best Buy CEO is looking at cost-cutting on all fronts. The cuts that he implements in addition to other actions will reduce general, administrative and selling expenses to the tune of $150 million. The Richfield, Minnesota-based company did not reveal how many people were employed at its headquarters but said that it has close to 8,000 employees in Minnesota, including those working at its stores and over 1,60,000 global employees.

Delayed reports

Joly took over the reins of the company in September and is in the middle of implementing a $750 million cost-cutting plan that he has been working on. The company is in direct competition with Amazon.com, Inc (NASDAQ:AMZN) and Wal-Mart Stores, Inc (NYSE:WMT) and had launched various discounts around the holiday season. Whether this and its policy to match competitors’ prices have hurt its profitability in any way is left to be seen. The cost cuts almost coincide with a buy-out offer that Richard Schulze, who was also the company’s former Chairman is slated to make to the company that he founded. Best Buy Co., Inc (NYSE:BBY) said that it wishes to see whether Schulze will actually make a bid and has kept its earnings release on hold till March 1. Schulze had proposed a $24-$26 per share buyout in August, less than two months since he resigned.

Relentless pursuit of customers

People in the know have said that he has been working on his finances with three different private-equity firms to provision for the buyout. Best Buy Co., Inc (NYSE:BBY) shares had sunk to $11.20 in December, picked up and then stabilized after holiday sales, price-matching and discounts were put in place by Joly. Competition strategies against Amazon.com, Inc (NASDAQ:AMZN) include the expansion of the company’s smaller outlets that are involved in the sales of mobile phones, shutdown of big-box stores and an increased investment in its e-commerce plans. Best Buy will also be extending its holiday discount price-matching strategy to rule out the possibility of customers just window-shopping and then making their purchases online. This is not a stop-gap arrangement but a year-long policy and will hopefully end the “showrooming” practice that shoppers adopt in a bid to get the lowest prices.

Shares of Best Buy Co., Inc (NYSE:BBY) went down by 3.18% to close at $16.46

Shares of Wal-Mart Stores, Inc (NYSE:WMT) went down by 0.95% to close at $71.11

Shares of Deutsche Bank AG (NYSE:DB) went down by 0.18% to close at $45.24

Shares of Amazon.com, Inc (NASDAQ:AMZN) went down by 0.20% to close at $259.36

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About Melissa Michaels

Melissa Michaels joined the NBC Connecticut news team in October 2007. Monica began her career as a general assignment reporter for WCTV in Tallahassee, Florida. During her career, she's covered big stories like the Joseph Smith murder trial. The trial received national attention after a car wash surveillance tape of Smith abducting 12 year old Carlie Brucia became prosecutor's main piece of evidence against him. She contributed to news coverage that gave the station several AP awards, including best continuing coverage.

View all posts by Melissa Michaels →

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