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