Electronics retailer Best Buy said Thursday it will close 50 big box stores in the U.S. and cut 400 jobs in corporate and support areas as it changes the focus of its operations to mobile.
The retailer also said it plans to open 100 new mobile locations as it rethinks its U.S. store set-up.
Brian Nagel, a research analyst at Oppenheimer, said Best Buy’s restructuring plans are “long overdue,” but also fraught with danger, given that they are taking place when the overall retail environment for electronics is “quite challenging.”
“Attempting to undertake this kind of a restructuring in a weak environment can be very problematic,” he told CNBC Thursday, adding that he is concerned that the company is attempting a major upheaval in its operations when “competition is getting ever more fierce.”
Sue Busch Nehring, a spokeswoman for Best Buy, said the company has not yet disclosed the locations of the 50 stores it plans to shutter, adding that the retailer will announce the specific store locations and timing for closings “once they are finalized.”
“We are quite deliberate and thoughtful when we make such decisions,” she said in an e-mail message. “We are working to ensure the impact to our employees will be as minimal as possible, while serving all customers in a convenient and satisfying way.”
Bricks-and-mortar retailer Best Buy has struggled in recent years as it has faced fierce competition from e-commerce giants such as Amazon.com and eBay.
Despite offering bigger discounts, the world's largest consumer electronics chain saw weak demand for gadgets in the holiday selling season.
News of the restructuring came as Best Buy reported its quarterly earnings.
Net loss was $1.7 billion, or $4.89 a share, for the fourth quarter ended March 3, compared with net income of $651 million, or $1.62 a share, a year earlier. Excluding charges, Best Buy earned $2.47 a share.
Sales rose to $16.63 billion, but fell way short of the analyst average estimate of $17.23 billion.
The retailer said it expects its restructuring efforts to save about $800 million in costs by fiscal 2015, including about $250 million in the current fiscal year.
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