Best Buy invests in small formats to cut big costs
MINNEAPOLIS — In a move to tighten its footprint and reduce costs, Best Buy Co. said Thursday it will close 50 of its signature big-box stores and open 100 of its small mobile locations in the United States in fiscal 2013. The shift will help cut $250 million in costs by 2013 and $800 million by 2015, said the electronics retailer.
The announcement coincided with Best Buy’s Thursday report that it posted a fourth quarter loss of $1.7 billion, compared with a profit of $651 million in the year-ago period. The results included $2.6 billion in charges related mainly to its acquisition of Carphone’s interest in Best Buy Mobile, and adjusted results met Wall Street expectations.
Revenue edged up 3% in the quarter to $16.08 billion, missing the $17.17 billion in revenue that analysts expected. Same-store sales dipped 2.4%.
For the full year, Best Buy swung to a $1.23 billion loss, from a $1.28 billion profit in 2010. Revenue for the year rose 2% to $50.71 billion and same-store sales fell 1.7%.
Best Buy said it will test a new smaller format it is calling Connected Stores in San Antonio, and in St. Paul, Minn. The renovation will reduce square feet in both stores by 20% and will turn the inventory focus to cell phones and other services such as showing customers how to connect electronics throughout the home.
Continued rollout of the mobile-only stores calls for 600 to 800 by 2016, up from 305 currently.
Additional cost-cutting measures include cutting 400 positions.
“We intend to invest some of these cost savings into offering new and improved customer experiences and competitive prices — which will help drive revenue,” CEO Brian Dunn said in a Thursday statement. “And, over time, we expect some of the savings will fall to the bottom line.”