Best Buy will close 50 of its big-box stores after the company posted fourth-quarter earnings today that showed a $1.7 billion loss compared to a $651 million profit in the year-ago quarter.
The results included $2.6 billion in charges, mostly related to the company’s purchase of Carphone Warehouse Group’s interest in the Best Buy Mobile profit-sharing agreement and related costs, as well as an impairment charge tied to writing off Best Buy Europe goodwill and restructuring charges.
The company said it will refocus its business on mobile and smaller brick and mortar outlets. The company plans to open 100 boutique-size Best Buy Mobile stores by 2013 and continues to expect to have a total of 600 to 800 such stores by fiscal 2016. The company currently has 305 of the stores today.
Brian Dunn, CEO of Best Buy, said the company will take "major actions" to improve performance going forward.
"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 standalone 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," Dunn said.
The company hopes the changes will help lower its overall cost structure. It intends to invest some of the cost savings into offering new customer experiences and more competitive prices. Best Buy also said it will continue growing its business in China.
Going forward, Best Buy said it expects to reduce about $250 million of its costs in fiscal 2013. The company foresees fiscal 2013 earnings of $2.85 to $3.25 per share and adjusted earnings of $3.50 to $3.80 per share. Analysts expect earnings of $3.67 per share.
Shares of Best Buy were down just over 6 percent in early morning trading to $24.97.