Best Buy Hammers Workers As Business Model Fails

By Douglas A. McIntyre Published Apr 15, 9:00AM EDT

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Best Buy Hammers Workers As Business Model Fails — © Justin Sullivan / Getty Images News via Getty Images

Best Buy fired at least several hundred workers recently. It is either a sign of a slowing economy, or an admission that its business model is flagging. Either way, it is not good for the future of Best Buy workers, or investors.

The Wall Street Journal made two points about the layoffs. The first is that workers can apply for better jobs at Best Buy. It is a fair guess that not all of them will be reemployed. The second point is that as Best Buy’s sales move online, it needs fewer people.

The online part of the argument depends on Best Buy’s ability to compete with other online retailers. The company is up against Amazon.com which has much larger ecommerce revenue and Apple. Best Buy sells Apple products, so the question is where do people buy iPhones and Macs.

Best Buy shares have taken a brutal beating this year compared to its online competitors. It is a sign that Wall Street thinks Best Buy cannot effectively compete. Its shares are down 9% in 2023. Shares of Apple are 27% higher. Shares of Amazon are up 22%. Perhaps a better way to make the comparison is that Best Buy’s market cap is $16 billion. Apple’s is $2.6 trillion. Amazon’s is just above $1 trillion. Those numbers, by themselves, tell a horrible story for Best Buy. (This is the biggest US company the year you were born.)

Best Buy has stumbled and bumbled trying to put up a fight against Amazon for years. A longer term look at stock prices shows that Best Buy’s shares have risen 3% in five years. Amazon’s are up 43%. Apple’s are up 279%. To make matters worse, the Nasdaq is higher by 70% over the same time frame.

Best Buy has been a terrible investment. Firing people won’t change that. The company is irreparably broken. (These are America’s worst retailers.)

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.