Unhappy Holidays for Best Buy

If investors have been looking for one more sign that Best Buy is (NYSE: BBY  ) struggling, they got it. The electronics retailer plans to hire far fewer temporary employees for the holiday season shopping rush. Talk about a dark and gloomy Black Friday.

Best Buy plans to bring on 15,000 seasonal employees, about half the number it hired last year. It's also going to rely on full-time staffers to put in some overtime to make up for any shortfall in manpower. According to Reuters, CEO Brad Dunn's explanation linked continued tight consumer spending this year even during the major gift-giving season.

The concept that this year's holiday shopping season could be difficult and highly competitive isn't rocket science. Wal-Mart (NYSE: WMT  ) has finally caved and joined Sears Holdings' (Nasdaq: SHLD  ) Kmart in bringing back layaway.

Best Buy's not the only retailer that's planning to get stingy with the holiday help. Toys R Us will hire 40,000 part-timers this holiday season, 5,000 less than in 2010. A Hay Group survey recently revealed that 25% of retailers intend to hire fewer holiday workers than they did last year.

Regardless, Best Buy's seriously sluggish hiring plans mostly reflect its own weakened competitive footing. Department-store retailer Macy's (NYSE: M  ) plans to boost its part-time hiring by 4% to 78,000 temps, for example. The move at Macy's could be a sign of strength (or a strategic mistake), but obviously it's one of the retailers that expects decent shopping traffic.

Meanwhile, Best Buy's announcement that it will stock Amazon.com's (Nasdaq: AMZN  ) new Kindle Fire product (as will other retailers, including Staples (Nasdaq: SPLS  ) ) for the holidays drips with irony. As much as that could prove a must-have holiday gift, Amazon's magnified competitive advantage over Best Buy is the longer-term story and a serious danger to the future of the latter. Oh, man, the business mandate to stock a hot product emblazoned with the brand of your archnemesis has gotta burn.

When the holiday season doesn't even look like it can help a retailer, you have to wonder whether its better days are behind it. Perhaps Best Buy can drum up some cash surprises in its Christmas stocking, but right now, the near term looks bleak, and Best Buy doesn't look like a good buy for investors.   

Alyce Lomax owns no shares of any of the companies mentioned. The Motley Fool owns shares of Best Buy and Wal-Mart Stores. Motley Fool newsletter services have recommended buying shares of Wal-Mart Stores, Amazon.com, and Staples and creating a diagonal call position in Wal-Mart Stores. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On September 30, 2011, at 1:35 AM, Nick8961 wrote:

    I don't think this will harm Best Buy but instead help Best Buy. Most seasonal employees get less than 20 hrs a week. Why not spread that out to PT and FT which already know the process and less training on an employee who works for 3 months. This in return will benefit the customer and best buy in my opinion.

  • Report this Comment On October 01, 2011, at 6:11 PM, prginww wrote:

    I work at bby and I think its great to let us have the hrs. if we want them. By the time seasonal is trained its time for them to go.

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