Best Buy is closing 50 big box stores and plans to open 100 Best Buy Mobile Phone Stores. By 2016 Best Buy expects to have 600-800 mobile phone stores.
Best Buy announced a loss of $1.7 billion for its 4th quarter ended March 3rd. This looks worse than it is, still Best Buy is making a lot of changes. The fiscal fourth quarter 2012 results include $2.6 billion of charges primarily related to the actions announced on November 7, 2011, which consist of the purchase of Carphone Warehouse Group plc's (CPW) share of the Best Buy Mobile profit share agreement and related costs, a non-cash impairment charge to reflect the write-off of Best Buy Europe goodwill, and restructuring charges (primarily associated with U.K. big box pilot store closures).
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Excluding the above charges, adjusted (non-GAAP) diluted earnings per share for the fourth quarter were $2.47, an increase of 25 percent when compared to adjusted diluted earnings per share of $1.98 for the prior-year period. Comparable store sales for the quarter declined 2.4 percent compared to a decline of 4.7 percent for the prior-year period.
Best Buy is closing 50 of its big box stores and sees big revenue potential in smartphone sales. Best Buy will open 100 mobile only stores this year. By 2016 Best Buy expects to have 600 to 800 mobile stores. Best Buy apparently has great success selling phones. Recently we reported that Best Buy is already almost matching Apple in iPhone Sales.
"In order to help make technology work for every one of our customers and transform our business as the consumer electronics industry continues to evolve, we are taking major actions to improve our operating performance," said Brian J. Dunn, CEO of Best Buy.
"As part of our multi-channel strategy, we intend to strengthen our portfolio of store formats and footprints --- closing some big box stores, modifying others to our enhanced Connected Store format, and adding Best Buy Mobile stand-alone locations --- all to provide a better shopping environment for our customers across multiple channels while increasing points of presence, and to improve performance and profitability.
These changes will also help lower our overall cost structure. We intend to invest some of these cost savings into offering new and improved customer experiences and competitive prices --- which will help drive revenue. And, over time, we expect some of the savings will fall to the bottom line. At the same time, we will continue to accelerate our key initiatives --- growing connections and services, expanding our digital capabilities and growing our business in China.
As a result, we believe these actions will position us to grow earnings, improve ROIC, and increase value to our shareholders in the years ahead."
More details on the Best Buy plans can be found here.
I think Best Buy also needs to focus on optimizing its big box store experience. The problem is that many customers check out the gadgets at Best Buy and then go online to buy it for the lowest price. This is the reality and Best Buy needs to adjust to that. Best Buy could just offer to match the price proactively. To offset the cost of running a store and have sales clerks, Best Buy could offer sales consulting for a fee. If a customer buys, he gets the fee reimbursed. To offer this, Best Buy sales consultants would need to really know their stuff and have real knowledge. I think this would be attractive to many customers as it would save them the time of doing their own online research to find the best matching product to buy.
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