Best Buy reports strong sales as it brings back furloughed workers

Key Points
  • Best Buy furloughed about 51,000 hourly employees and cut executive pay in April. 
  • The company said Tuesday that it's brought back about half of those workers as demand rebounds. 
  • It's also changing its pay structure to have a starting wage of $15 an hour.

In this article

A shopper makes a purchase at a Best Buy store in Corpus Christi, Texas.
Eddie Seal | Bloomberg | Getty Images

Best Buy said Tuesday that it's brought back about half of its furloughed employees as sales rebound.

The retailer said in a news release its second-quarter sales are up about 2.5% through July 18, compared with the same period a year prior. That includes sales growth of 2% in the U.S. and about 8% internationally, the company said.

Online sales have jumped by 255% so far in the second quarter, compared with a year ago. It said customers' purchases of computers, appliances and tablets are driving those sales.

"Strong consumer demand, combined with shopping experiences that emphasize safety and convenience, has helped produce our sales results to date," Best Buy CEO Corie Barry said in a news release. "None of this would be possible without the effort and energy of our front-line employees working in stores, supply chain facilities and customers' homes."

Best Buy shares shot up in extended trading on the news. On Wednesday morning, shares were up 5% in premarket trading.

On Tuesday, the company said it's also changing the way it pays employees. During the pandemic, it has paid incentives to employees. The appreciation pay began March 22 and ends Aug. 1. Starting Aug. 2, all hourly employees will get a 4% raise and the company's starting pay will be $15 an hour.

A company spokesman would not disclose its prior starting wage or how many workers would get a raise because of the policy change, but he said it would make pay more predictable for employees.

Other retailers have raised employees' wages during the pandemic, too, with bonuses or pay boosts. Target recently raised its minimum wage to $15 an hour as part of a multiyear effort to boost employee pay. The change, which began July 5, effectively gave a raise to about 275,000 of its more than 350,000 employees. Earlier today, Walmart announced it will give hourly employees a third round of bonuses during the pandemic and a day off by closing on Thanksgiving.

Best Buy saw strong demand in the early weeks of the pandemic as customers bought kitchen appliances, computer monitors and laptops to help them cook, learn and work from home. Stores switched to a curbside-pickup-only model, even though Best Buy was deemed an essential retailer. 

In mid-April, however, Best Buy said the company laid off about 51,000 hourly employees, including nearly all of its part-time workers, and cut executive pay. About 82% of full-time store and field employees, such as Geek Squad agents, stayed on the payroll.

Best Buy's revenue and earnings dropped in the first quarter, which ended May 2. Same-store sales also fell by 5.3%.

Starting in May — at the start of the second quarter — Best Buy began letting customers return to stores, but by appointment only. In mid-June, it began bringing back about half of its furloughed employees and allowing customers to walk into stores without an appointment at more than 800 stores.

As company stores have been open again from June 15 to July 18, sales have grown by about 15% and online sales rose by 185% compared with the same period a year prior.

Nearly all of the company's 1,000 stores reopened to shopping as of June 22.

Best Buy said Tuesday that it will cover the cost of health benefits through Sept. 5 for employees who are enrolled in a health plan but remain furloughed.

Former Best Buy CEO Hubert Joly on how retail will change post-coronavirus
Former Best Buy CEO Hubert Joly on how retail will change post-coronavirus