Quantcast

Best Buy Closing 50 U.S. Stores, Stock Drops

    March 29, 2012
    Mike Fossum
    Comments are off for this post.

It has been reported that Best Buy plans to close 50 big-box U.S. stores by 2013, causing its stock to take a hit. Still, the company says it seeks to open 50 stores in China, after reporting its quarterly results.

Best Buy shares dropped 8% after the announcement of the closings, regardless of reporting better than expected earnings. Analysts at Thomson Reuters projected the company’s adjusted quarterly profits to be $2.16 a share, significantly lower than the $2.47 that Best Buy just reported.

The company presently has 1,105 big-box stores nationwide, according to spokeswoman Kelly Groehler. There are also 195 stores operating in China at present. Best Buy plans to open about 100 “mobile small format stand-alone stores” in the U.S. in 2013, and 14 of the new Chinese stores will be “mobile store-within-a-store concepts.” The stores in China operate under Best Buy’s Five Star brand.

Groehler explained that the “stand-alone” stores will be opened in strip malls and similar retail environments. The “store-within-a-store” is basically a small Best Buy store located within a larger Best Buy store. The company opted not to identify which locations were being closed.

Best Buy has been taking hits in a market that has become increasingly dominated by online retailers, mainly Amazon. The company projects $250 million in savings for 2013, and hopes to cut $800 million in costs by 2015.