January 28, 2009 / 12:48 AM / 9 years ago

Best Buy plans layoffs at headquarters

ATLANTA (Reuters) - Electronics retailer Best Buy Co (BBY.N), which offered voluntary exit packages to corporate workers in December in a bid to cut costs, said on Tuesday it planned involuntary layoffs at its Minneapolis headquarters.

Employees were told on Tuesday about the layoffs and further details will be released on February 19, Best Buy spokeswoman Sue Busch Nehring said in an email.

No information has been shared about the number of jobs or positions that will be affected in the headquarters layoffs, she added.

Best Buy “tried to be innovative and thoughtful to employees by offering the voluntary packages,” said Brad Thomas, an analyst with KeyBanc Capital Markets. “Given the weak sales environment, it’s really not a surprise” that involuntary cuts are coming, he added.

Best Buy joins a growing list of retailers cutting jobs as a deepening recession and soft housing market pressure consumer wallets. Discounter Target Corp (TGT.N) also said on Tuesday it would cut jobs, and Home Depot (HD.N) announced on Monday it would cut 7,000 jobs and close its Expo Design Center chain.

The top U.S. specialty electronics chain said about 500 of its slightly less than 4,000 headquarters workers accepted the voluntary exit packages.

The company plans to take a charge in its fourth quarter tied to those departures.

Workers whose jobs will be eliminated next month will remain employed for at least 30 days after they are notified of the involuntary layoffs, Busch Nehring said. Some new jobs will be created as part of this process, she added.

She also said laid-off employees were expected to receive less severance than workers who are leaving voluntarily. For example, an average, non-managerial corporate worker would receive six months of severance pay under the involuntary plan, compared with 7.5 months severance under the voluntary program.

The Minneapolis-based chain has expanded sales of mobile phones and stepped up other product offerings to counter increased competition from discounters but sales have softened in the recession.

Earlier this month, Best Buy said sales at stores open at least 14 months, or same-store sales, fell 6.5 percent in December during the worst U.S. holiday shopping season in nearly 40 years.

At that time, the retailer narrowed its profit forecast for its fiscal year ending next month to a range of $2.50 a share to $2.70 a share excluding items. That compares with a lowered forecast of $2.30 to $2.90 a share it gave in November, when Best Buy said the meltdown in financial markets had spurred “seismic” changes in consumer behavior.

Best Buy shares closed up 4 cents to $28.26 on the New York Stock Exchange on Tuesday.

Reporting by Karen Jacobs; Editing by Ted Kerr, Phil Berlowitz

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