Recently, Best Buy laid off at least several hundred employees. It is either a sign of an economic slowdown or an admission that the company’s business model is faltering. In either case, the situation is detrimental to the future of Best Buy employees and investors.
Regarding the layoffs, the Wall Street Journal made two observations. The first is that Best Buy employees can apply for higher employment. It is reasonable to assume that not all of them will be rehired. The second point is that as Best Buy’s revenues shift online, fewer employees are required.
Best Buy’s capacity to compete with other online retailers is crucial to the online portion of the argument. Amazon.com and Apple have much larger e-commerce revenues than the company. Best Buy sells Apple products, so the issue is where iPhones and Macs are purchased.
Best Buy Hammers Workers As Business Model Fails
Compared to its online competitors, Best Buy’s stock has taken a severe pounding in 2018. It indicates that Wall Street believes Best Buy cannot compete effectively. In 2023, its shares are down 9%. Apple’s stock is 27% higher.
Amazon’s stock is up 22%. Perhaps a more appropriate comparison is that Best Buy has a market capitalization of $16 billion. Apple’s market capitalization is $2.6 trillion. Amazon’s market capitalization is just above $1 trillion. These numbers alone paint a dismal picture for Best Buy. (This was the largest company in the United States the year you were born.)
Best Buy has bungled and bumbled for years while attempting to compete with Amazon. A longer-term examination of stock prices reveals that Best Buy’s shares have risen by 3% over the past five years. Amazon’s have increased by 43%. Apple’s stock is up 279%. In addition, the Nasdaq has increased by 70% over the same time frame.
The stock of Best Buy has been a poor investment. Firing employees will not alter this fact. The company is beyond repair. (These are the worst retailers in America.)