Best Buy unveils cost-cutting plans
Corporate severance package to be improved; some involuntary redundancies possible
Best Buy has announced plans to cut corporate expenses "significantly" by making nearly all of its corporate employees eligible for a voluntary separation package, as part of wider plans to cut capital expenditure by 50 per cent next year.
The package will offer a large increase in the base severance offer, which excludes the CEO Brad Anderson, but the company warned that some involuntary redundancies might be inevitable.
"We view our employees as the primary strength of this organization," said Anderson. "However, based on the recent changes we've seen in consumer behaviour and the potential for worsening consumer spending, we need to prepare our organization to operate in a wide range of potential macro economic scenarios in the coming year.
"Additional prudent actions will be taken to prepare the business, such as reducing our capital spending by approximately 50 percent next year, including a substantial reduction in new store openings in the United States, Canada and China. We also are reducing legacy expenses in our model as quickly as we can without affecting the customer's shopping experience.
"In the current year, SG&A spending, excluding Best Buy Europe, is expected to grow approximately 9 percent; in contrast, we are planning for SG&A dollars next year to grow by no more than 2 percent over this year's levels.
"To bring our cost structure to that level, our efforts have to include savings in corporate staffing. We want to do it in such a way as to minimize involuntary separations. We believe our broad, voluntary program helps prepare us for the unpredictable year ahead while reflecting our company values and respect for our people."
Best Buy's share price was down by 0.67 per cent on Friday, following financial results that saw revenues up, but profits down.