Best Buy Reports Results, Plans to Close 50 Stores as it Transform Business
Mar 30, 2012
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Appliances and electronics retail chain Best Buy Co. will close 50 stores in the United States in the coming year as part of a new, multi-year cost-cutting initiative.
Best Buy reported revenue of $50,705 million in the fiscal year ended March 3, 2012, up slightly from $49,747 in the previous fiscal year. Gross profit for the year was $12,573, compared to $12,541 in the previous fiscal year.
For the fiscal year ended March 3, 2012, comparable store sales declined 1.7% compared to a decline of 1.8% for the prior-year period.
Comparable domestic store sales of appliances were up 13.2% in the fourth quarter of the just-ended fiscal year, compared to a rise of 6.5% in the same quarter of the previous year.
International stores saw appliance comparable store sales rise 6.7% in the fourth quarter, compared to an increase of 0.9% in the fourth quarter of the previous year.
Best Buy reported a net loss of $1.7 billion for its fourth quarter ended March 3, 2012, compared to net income of $651 million in the same quarter of the previous fiscal year. The fourth quarter 2012 results include $2.6 billion in charges for acquisitions and UK restructuring, among other things.
"We are taking major actions to improve our operating performance," said Best Buy CEO Brian J. Dunn.
The retail intends to expand its multi-channel strategy, including:
* closing some big box stores
* changing some big box stores to the chain's Connected Store format
* adding Best Buy Mobile stand-alone locations
The retailer also plans significant actions to cut costs: $250 million in fiscal 2013 and a total of $800 million by fiscal 2015. Cuts will include: $300 million from domestic retail stores, $300 million from corporate and support structure, and $200 million from cost of goods sold. Among the steps to be taken:
* 50 U.S. Best Buy big box stores will close in fiscal 2013
* 400 corporate positions will be eliminated
Cuts in the cost of goods sold will be driven by reduction of product transition costs, lower product return and exchange expenses, and supply chain efficiencies.
A new retail store strategy will include a new labor strategy at the same time it decreases overall square footage.
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