Best Buy nets $1-billion, but layoffs ahead
By MARK ALBRIGHT
Published March 31, 2006
Best Buy Inc. on Thursday reported its first $1-billion earnings year, then said it plans to cut $300-million in expenses, largely with layoffs.
The nation's biggest consumer electronics retailer was vague about how many of 109,000 employees' jobs are on the line. But redundant jobs will disappear down to the store level.
The chain employs more than 700 in six stores in the Tampa Bay area. It also is trimming its ad budget. The company expects severance payouts will carve 3 to 5 cents from first quarter earnings.
For the fourth quarter, Best Buy reported that net income rose 24 percent to $644-million, or $1.29 a share, up from $572-million, or $1.04 a share. Revenues were $10.7-billion, up from $9.2-billion.
For the year, net income was $1.14-billion, or $2.27 a share, up from $984-million, or $1.96 share. Revenues hit $30.8-billion, up from $27.4-billion.
Officials credited the strong performance to Best Buy's two-year transition from a product-driven, self-service retailer to more of a customer-service-oriented one that installs products. A big part of the switch was the creation of the 12,000-employee Geek Squad, which offers product help and paid installation services.
While Geek Squad staffing is frozen, the company will add 1,000 installer jobs to the current 1,500 to support Best Buy's move into high-end home theater systems.
[Last modified March 31, 2006, 01:08:15]
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