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To: joseffy who wrote (45554)

7/8/2012 8:30:41 PM

From: Hope Praytochange

Respond to of 48461

Best Buy Layoffs Signal Weak Holiday Hiring in Retail

Published: Friday, 6 Jul 2012 | 4:25 PM ET

By: Stacey Widlitz
Retail Consultant and Independent Analyst

Best Buy lets go Geeks, rubbing a little salt in the jobs data wound.

Getty Images
Best Buy plans to layoff 2,400 workers, including 600 members of its Geek Squad, according to a source at the company.

Word that Best Buy plans to let go 600 Geek Squad employees coincided with less-than-stellar jobs data. It also came one day after the release of less-than-inspiring June retail sales. (Maybe Best Buy is making room for those retention packages for senior management presiding over one of the worst performing retail stocks?)

While Best Buy [BBY 21.59

-0.15 (-0.69%)

] cutting back on staff is nothing new — and certainly not a surprise — it may be the first of many announcements to come from retailers, especially as the holidays approach. Last year, Best Buy cut back on its plans to hire temporary staff for the Christmas holiday season, adding only 15,000 workers versus 29,000 in 2010.

Same-store sales reported Thursday were for the most part uninspiring. The good news was expectations were low. While that may have given stock prices a break, holiday hiring may not be as lucky.

Disappointing sales from Target [TGT 58.07 0.92 (+1.61%) ] , Kohl's [KSS 47.75 0.72 (+1.53%) ] , Costco [COST 93.68

-0.32 (-0.34%)

] , The Buckle [BKE 38.47

-0.03 (-0.08%)

] and Macy's [M 34.03

-0.24 (-0.7%)

] piling on top of ugly ISM manufacturing data and declining consumer confidence have to raise obvious concerns. Management teams this year might deliver a lump of coal in our stockings by taking a conservative approach and not adding extra holiday temp workers.

Last year even struggling retailers added staff. For example, JCPenney added 35,000 workers versus 30,000 in 2010. The number of workers Kohl's hired was up 5 percent.

And then we had the market-share success stories helping out. Take Macy's, which boosted its hiring by 4 percent.

Based on the obvious, I am guessing JCPenney [JCP 22.13

-0.37 (-1.64%)

] and Kohl's [KSS 47.75

0.72 (+1.53%)

] might be taking a different approach this year — and even the consistent outperfomers are starting to show cracks and might approach the holiday season with more caution.

And don't forget store closures. Gap [GPS 27.88 -0.09 (-0.32%) ] is reducing square footage in North America in favor of international growth. Looking at Gap's latest monthly sales results may suggest it is not working out so well, but I digress.

Abercrombie [ANF 33.51 -1.16 (-3.35%) ] is also reducing store counts and one could argue there may be more to come in the teen space. Bottom line is: while we saw a significant "wash out" of retailers post-2008, there is likely more to come.