Best Buy lets go Geeks, rubbing a little salt in the jobs data wound.
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Word that Best Buy plans to let go 600 Geek Squad employees coincided with less-than-stellar jobs data. It also came one day after the release of less-than-inspiring June retail sales. (Maybe Best Buy is making room for those retention packages for senior management presiding over one of the worst performing retail stocks?)
While Best Buy cutting back on staff is nothing new — and certainly not a surprise — it may be the first of many announcements to come from retailers, especially as the holidays approach. Last year, Best Buy cut back on its plans to hire temporary staff for the Christmas holiday season, adding only 15,000 workers versus 29,000 in 2010.
Same-store salesreported Thursday were for the most part uninspiring. The good news was expectations were low. While that may have given stock prices a break, holiday hiring may not be as lucky.
Disappointing sales from Target ,Kohl's ,Costco, The Buckle and Macy's piling on top of ugly ISM manufacturing data and declining consumer confidence have to raise obvious concerns. Management teams this year might deliver a lump of coal in our stockings by taking a conservative approach and not adding extra holiday temp workers.
Last year even struggling retailers added staff. For example,JCPenneyadded 35,000 workers versus 30,000 in 2010. The number of workers Kohl's hired was up 5 percent.
And then we had the market-share success stories helping out. Take Macy's, which boosted its hiring by 4 percent.
Based on the obvious, I am guessing JCPenney and Kohl's might be taking a different approach this year — and even the consistent outperfomers are starting to show cracks and might approach the holiday season with more caution.
And don't forget store closures.Gapis reducing square footage in North America in favor of international growth. Looking at Gap's latest monthly sales results may suggest it is not working out so well, but I digress.
Abercrombieis also reducing store counts and one could argue there may be more to come in the teen space. Bottom line is: while we saw a significant "wash out" of retailers post-2008, there is likely more to come.
Stacey Widlitz is the President of SW Retail Advisors Inc. She has worked at UBS, SG Cowen, Fulcrum Partners and in 2005 was one of three analysts to launch the Research Department at Pali Capital, where she covered Retail and Home Video for 5 years. Follow Stacey on Twitter @StaceyRetail.