Best Buy to Cut 400 MN Jobs, Add 100 Mobile Stores
Best Buy Company, Inc., on Thursday announced plans to close 50 big-box stores, including an undisclosed number in the Twin Cities, and eliminate hundreds of jobs this year at its Richfield headquarters.
Best Buy also said it will modify some existing stores to feature its new “connected store” format, which includes an updated layout that is meant to attract attention to new products and offer a more hands-on shopping experience. The company plans to roll out the new concept in the Twin Cities by this fall and in San Antonio, Texas shortly thereafter.
During a Thursday conference call, CEO Brian Dunn declined to disclose the exact locations of the 50 U.S. big-box stores that will be shuttered, saying that the company first plans to contact affected employees. But Dunn did say that the new markets for Best Buy's connected store formats-one of which is the Twin Cities-will experience store closures.
Best Buy spokeswoman Susan Busch said in an Thursday e-mail to Twin Cities Business that the 400 planned job cuts include both open and filled positions at the company's Richfield headquarters; about 325 employees will lose their jobs, she said. The cuts represent about an 8 percent reduction in corporate jobs, of which there are currently 5,100.
The company is “committed to investing in strategic growth areas and will expect-despite the eliminations described today-to continue hiring to support those plans and critical business needs,” Busch said.
Best Buy expects the restructuring to result in $800 million in savings during the next three years, including $250 million in savings this year.
“We intend to invest some of these cost savings into offering new and improved customer experiences and competitive prices-which will help drive revenue,” Dunn said in a statement. “And, over time, we expect some of the savings will fall to the bottom line.”
Best Buy said it plans to emphasize “key growth initiatives,” including e-commerce. The company recently hired former Starbucks Chief Information Officer Stephen Gillett to oversee its digital operations, and it projects that domestic online sales will grow 15 percent this year.
Best Buy also intends to add 100 standalone Best Buy Mobile locations during the next fiscal year-and it expects to operate between 600 and 800 of those locations within about three years. It currently operates 305 Best Buy Mobile stores.
And the company plans to open 50 new Five Star stores in China this year, with a goal of having between 400 and 500 such stores in the next few years. Best Buy acquired the Five Store chain of appliance stores in 2009, and it currently operates 204 Five Star stores in China.
The Richfield-based electronics retailer announced its restructuring plans in conjunction with its fourth-quarter and full-year financial results. For the quarter that ended March 3, the company reported a net loss of $1.7 billion, or $4.89 per share-compared to net income of $651 million, or $1.62 per share, during the same period a year ago.
The quarter included $2.6 billion in charges primarily related to the company buying out the Carphone Warehouse Group's stake in Best Buy's U.S. mobile phone business, as well as the closing of 11 big-box stores in the United Kingdom. Adjusted for those costs, the company's quarterly earnings totaled $2.47 per share.
Same-store sales-sales at stores open at least a year and an industry barometer-slid 2.4 percent during the quarter, but the decrease was less dramatic than the 4.7 percent drop experienced during the prior-year period.
For the full fiscal year, the company reported a loss of $3.36 per share, compared to earnings of $3.08 per share during the previous year. Same-store sales declined 1.7 percent during the year, essentially matching the 1.8 percent decline from the prior year. Revenue totaled $50.7 billion for the most recently completed fiscal year.
The company's stock price was down more than 9 percent to $24.10 per share during Thursday morning trading.