Friday, March 30, 2012
Best Buy to cut costs and close stores
Bloomberg Businessweek reports: Best Buy Co. said it plans to close 50 U.S. big box stores and open 100 small mobile locations in the U.S. during the 2013 fiscal year. It will also cut $800 million in costs by fiscal 2015. The news came yesterday as the biggest U.S. specialty electronics retailer posted a fiscal fourth quarter loss partly due to restructuring charges.
Despite the loss, Best Buy's adjusted results for the quarter topped Wall Street's expectations. But the company's full year revenue guidance fell slightly short of analysts' expectations, sending its stock down 6%.
Best Buy, which has 1,450 locations nationwide and 2,900 globally, is focusing on closing some of its hulking stores to concentrate on smaller Best Buy Mobile outlets because of two emerging trends. Sales of TVs, digital cameras and videogame consoles have weakened, while sales of tablet computers, smartphones and e-readers have increased. And with the rise of competition from Internet rivals like Amazon.com, shoppers aren't flocking to big-box stores like they used to.
Best Buy is trying to avoid the fate of its former rival Circuit City, which went out of business in 2009, in part by shrinking its square footage footprint. Other retailers with large stores are doing the same. Sears Holdings Co., for example, said earlier this month it would close 100 to 120 stores to become nimbler.
Best Buy lost $1.7 billion, or $4.89 per share, for the period ended March 3. That compares with a profit of $651 million, or $1.62 per share, a year ago.
--> Who didn't see this coming? I used to be a weekly Best Buy customer. I would go there for fun... Don't judge me. But truthfully, I don't really go there for anything anymore. Once they decided to stop making their movies and music section a priority, I checked out.