Richfield (MN) – Best Buy announced a 77 percent drop in its third-quarter profit on Tuesday. Its profit was $52 million, or 13 cents a share, compared to $228 million or 53 cents a share the same time last year. This announcement comes with the news that the company is going to have to cut its costs in whatever way possible, and will begin by offering 4,000 employees buyout options followed possibly by forced layoffs.
The company has stated that in additions to the employee buyout packages, they will cut capital spending by 50 percent in an attempt to stay afloat in 2009. With this news the company’s stock rose 18 percent to $27.68, up $4.11.
Employees accepting the voluntary buyout plan by January 5th will receive 7.5 months of severance pay, one year of health care including life insurance and outplacement services. If the employee’s age plus years of service with Best Buy total 60 or more, they will receive a full 12 months of severance pay.
The company will be opening a limited number of stores in the United States, Canada and China in 2009 and might even begin forced layoffs if enough employees don’t accept the voluntary buyout offer.
According to a regulatory filing Best Buy had almost 150,000 full-time, part-time, and seasonal employees in April.
At this time, the company has not announced any plans to close any of their facilities. Over the past 12 months, Best Buy’s stock price has dropped from a high of $82.50 to its current value of $28.18. The year low was $16.42. In October, Best Buy had dropped the price of a Blu-ray disc player to under $100 if you factor in $100 coupons used for savings on Blu-ray discs.