Best Buy Posts $1.7B Loss, Shuttering 50 Big Box Stores29 Mar, 2012 By: Erik Gruenwedel
Best Buy Co. March 29 reported a fourth-quarter (ended March 3) net loss of nearly $1.7 billion, compared with net income of $651 million during the previous-year period. Global sales increased 3% to $16.6 billion from $16 billion last year.
Much of the loss included $2.6 billion in impairment charges ($1.2 billion) and writedowns related to the purchase of Carphone Warehouse Group's interest in Best Buy Mobile, in addtion to the restructuring costs at Best Buy Europe.
Without the charges, the Minneapolis-based consumer electronics retailer actually posted operating income of $1.3 billion. Indeed, the same-store sales decline narrowed to 2.4% from 4.7% during the previous-year period.
The Minneapolis-based consumer electronics retailer said it would shutter 50 big box stores in the current (2013) fiscal year as it plans to cut $800 million in costs through 2015, including $250 million this year. It plans to open 100 smaller footprint Best Buy Mobile stand alone stores during the same period.
Best Buy ended 2011 operating more than 1,000 stores in the United States. It plans to operate 600 to 800 Mobile stores in the coming years, up from 305 stores today.
The No. 1 CE retailer said the restructuring, which includes $300 million at retail stores, $300 million at the corporate level and $200 million in cost-of-goods sold, reflects ongoing changes in consumer transactions, which increasingly occur online and at competing national retailers.
Cuts reportedly include 400 positions at both the corporate and retail levels. Best Buy employed about 180,000 full-time, part-time and seasonal workers at the end of 2011, according to company records.
"As part of our multichannel strategy, we intend to strengthen our portfolio of store formats and footprints — closing some big box stores, modifying others to our enhanced connected store format, and adding Best Buy Mobile stand-alone locations — all to provide a better shopping environment for our customers across multiple channels while increasing points of presence, and to improve performance and profitability,” CEO Brian Dunn said in a statement.
"We intend to invest some of these cost savings into offering new and improved customer experiences and competitive prices, which will help drive revenue," he continued. "And, over time, we expect some of the savings will fall to the bottom line. At the same time, we will continue to accelerate our key initiatives — growing connections and services, expanding our digital capabilities and growing our business in China."
Best Buy plans to open 50 Five Star big box stores in the country this year, including 14 mobile, store-within-a-store concepts.