Best Buy ($BBY) stores usually begin the year with open positions at a low, then ramps up hiring all the way to September. Now, it seems the big box retailer is pulling out a new playbook in 2019, as job openings are down nearly 20% during the month of May.
Investors can use data including foot traffic, store openings and job listings to gauge the health of a business - and right now, analysts tracked by Zacks Investment Research are predicting an increase in earnings to $0.88 per share when Best Buy announces its results on May 23. Best Buy stock is up nearly 30% to start the year.
In 2017 and 2018, open positions typically grew for months, until September — at that point, they begin to decline. This jump in need for staff coincides with both back-to-school shopping, and the onset of the NFL season that brings more big-screen shoppers to stores like Best Buy.
Slowing Their Roll
But in 2019 Best Buy is slowing the number of job openings it listed on its official careers page, which indicates a decrease in hiring. From the 2019 peak, at April 26, to Wednesday, May 22, Best Buy reduced job openings from about 3,860 to 3,090 - a fall of nearly 20%. Compared to the two prior years, this seems to represent an anomaly.
Store Count Stays Static
If Best Buy were closing a substantial number of stores, that would help explain away the steep drop-off in open positions. But, by our chart above, we see store counts have barely fallen.
Checkins Are Down
A Best Buy optimist would hold out hope that, despite the steep decline in job postings, shoppers might help to reverse this trend. Based on our Facebook ($FB) Checkins data, we are seeing a 2% decline in this type of engagement - although it isn't encompassing all foot traffic, and it doesn't cover web traffic either.
The trends may not be positive, but they also do not represent 100% of Best Buy's business. Still, Target ($TGT), which saw shares rise 8% after a substantial earnings beat Wednesday May 22, had headcount rise this spring more than is typical for the big-box retailer.
Ultimately what is impacting Best Buy may not have as much to do with its business, as with geopolitical implications. In March, Best Buy joined a group of retailers that sent President Donald J. Trump a signed letter expressing concerns about tariffs coming from the continued trade war with China.
“We estimate that $200 billion list that went into effect in September touches only about 7% or around $2.3 billion of our total cost of goods sold,” Best Buy Chief Financial Officer Corie Barry said February 27, 2019, on the company’s fourth quarter earnings call. “Our fiscal 2020 outlook assumes that the tariffs stay at the current rate of 10%.”
But that's not even a guarantee any longer. More than a sign of decline in US business, Best Buy's hiring reversal could be a signal it is bracing for a longer trade war with China - but its earnings report Thursday will tell the full story.