Cost-cutting measures are usually welcome ones. And today, that proved exactly the case for electronics retailer Best Buy (NYSE:BBY), as it announced plans to stage a huge new slug of layoffs. The news wasn’t welcome to those who lost jobs, but shareholders were pretty happy about it, as Best Buy notched up fractionally in Monday afternoon’s trading.
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Back on Friday, Best Buy announced a “work from home” event for members of the Geek Squad, its in-house electronics repair operation. While the news was no doubt welcome for those who didn’t want to fight traffic to get to work that day, for an as-yet-unknown number, it was the last day they’d ever have.
A “company change” followed, and several of those working from home discovered they were let go. The reason behind the layoff was about as stark as it got: one former employee noted that “Our leadership gave individual calls stating we were being let go for the simple fact that the company couldn’t afford to pay us.”
Changing, But for the Better?
This is part of a larger set of changes kicking in at Best Buy, reports note. After all, we’ve known since late last year that Best Buy was getting out of the physical DVD space, a heartbreaker for everyone with a Blu-ray collection who’s been fighting the move to universal streaming. Meanwhile, some investors are growing concerned about Best Buy’s rate of capital expended (ROCE). While Best Buy is clearly reinvesting back into the business, the sales figures aren’t coming up yet, which isn’t all that surprising when you consider the macroeconomic picture that most are laboring under these days.
Is Best Buy a Hold or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on BBY stock based on seven Buys, seven Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 12.56% rally in its share price over the past year, the average BBY price target of $85.50 per share implies 6.5% upside potential.
