Best Buy Reports Earnings, Announces the Closing of 50 Stores
March 29, 2012 1:26 PM
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Best Buy to cut 400 workers to save money
Best Buy may have dominated its former competitors to the point where
went out of business, but it appears Best Buy itself is now under pressure. The electronics giant recently offered up its financial details and among the profits and losses was a tidbit that the company intends to save $800 million in costs.
Some of the cost savings will come with the closure of 50 retail stores. Out of that $800 million, Best Buy wants to save $250 million during the first fiscal year. Not all the savings will be from the closure of retail locations, Best Buy also plans to use information technology to make its support structure more efficient and eliminate 400 positions in the corporate and support workers.
Best Buy currently has 1,100 big-box retail stores.
While it plans to close 50 big-box retail locations, the electronics giant is also planning to open 100 additional Best Buy Mobile small format standalone stores. Some key big-box retail locations will also be redesigned into the so-called "connected store" formats that focus on selling mobile phones and activating video and broadband services. The retail giant also hopes to increase its domestic online sales by 15%.
The latest financial details are for the quarter that ended on March 3 and Best Buy posted a $1.7 billion loss working out to a loss of $4.89 per share compared with a profit in the same quarter of 2011 of $651 million. Some of the loss in the current quarter is attributed to the $2.6 billion in restructuring costs and other charges Best Buy took.
If we ignore restructuring costs and other one-time fees, Best Buy actually posted a profit better than Wall Street predicted at $2.47 per share. Best Buy is projecting earnings of between $3.50 and $3.80 per share for the new fiscal year with revenue of $50 billion.
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Change with the times!
3/29/2012 9:51:42 PM
Honestly, they're doing the right thing. There's just too much floor space dedicated to stuff nobody buys anymore like GPS, landline phones, Windows desktops... Averaging a couple thousand sqare feet less per store won't hurt anything. They don't need much floor space for the ultra-profitable cellphones and Geek Squad.
50 is a pretty small percentage of stores and it'll only be the lowest performing locations that are dropped.
RE: Change with the times!
3/30/2012 11:56:31 AM
You must be kidding right?
RE: Change with the times!
3/30/2012 12:07:43 PM
Uh, GPS are probably one of those most popular sellers in those stores. And people do buy desktops, because they don't want laptops, or they are gamers and want something that ISN'T a laptop.
Interestingly, the major push when I was there was
Appliances (Huge margins)
Cell Phones (Kickback from carriers for post paid plans. Wonder why the salesperson pushes mobile broadband and new cell phones? Because each store will get roughly $300 in pure margin from the carrier for EACH DEVICE.
Gaming: Trade-Ins, and profit on accessories.
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