Best Buy to cut costs, 50 stores

But chain will add 100 small outlets

MINNEAPOLIS - In order to grow, Best Buy is shrinking.

For years, the largest US specialty electronics retailer expanded quickly by opening big-box stores nationwide. But shoppers have started using the hulking stores as showrooms where they can test out products before buying them cheaper elsewhere.

To revamp the struggling chain, Best Buy said Thursday that it plans to close 50 of its US big-box stores, cut 400 corporate jobs, and trim $800 million in costs.


The company, which has about 1,400 US locations, also plans to open 100 smaller and more profitable Best Buy Mobile stores. Best Buy did not say which stores would be closed, and it was unclear whether any Massachusetts locations would be shuttered.

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“How do we position the company so we’re where our customers need us to be?’’ said chief executive Brian Dunn on Thursday. “We’re clearly going to have more doors and less square footage.’’

Best Buy is trying to avoid the fate of Circuit City, a rival that was liquidated in 2009 after it struggled with the changing landscape. Sales of TVs, digital cameras, and videogame consoles - once the bread-and-butter of electronics retailers - have weakened, while sales of lower-margin items like tablet computers, smartphones, and e-readers have increased. The rise in competition from Internet rivals like and discounters like Target also has hurt electronics retailers.

To better compete, Best Buy is shaking up its business. In addition to closing some big-box stores, the company will focus on what sets it apart: a trained sales staff that can help shoppers get the most out of their tablets, TVs, and other electronic devices, including tech support from its Geek Squad service-and-repair unit.

But even as Best Buy announced the changes on Thursday, the Minneapolis-based company posted a $1.7 billion fiscal fourth-quarter loss that was partly due to restructuring charges. Despite the loss, Best Buy’s adjusted results topped Wall Street’s expectations.


But investors worried that Best Buy’s restructuring does not go far enough, and its shares slid about 7 percent.

Best Buy’s loss amounted to $4.89 per share for the period ended March 3, compared with a profit of $651 million, or $1.62 per share, a year earlier. The results included $2.6 billion in charges mostly related to its purchase of Carphone Warehouse Group PLC’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. Taking these items out, adjusted earnings were $2.47 per share, above the $2.15 per share that analysts forecast.

Revenue rose 3 percent to $16.08 billion, but missed Wall Street’s $17.18 billion estimate. Revenue at stores open at least a year - an indicator of a retailer’s health - slipped 2.4 percent.

For the full year, Best Buy lost $1.23 billion, or $3.36 per share.