Best Buy officials announced today they will close 50 of their U.S. big box stores and lay off 400 employees at corporate and support levels, according to a news release.
The news comes after the Richfield-based company released its fiscal year fourth quarter earnings, showing a $1.7 billion loss in revenue. In addition, the Global Post reported the company aims to open 50 stores in China by 2013. The company did not say which stores would close.
The news of closures and downed profits are not a surprise to many, as Best Buy reported shortfalls after its third quarter in 2011 as well. In January 2012, and also suggested it was getting closer and closer to bankruptcy every day.
Going forward, Best Buy's retail store strategy is to increase points of presence, while decreasing overall square footage. Based on results from store pilots conducted in 2010 and 2011, Best Buy will be deploying "at-scale" market tests of its new Connected Store format in the Twin Cities and San Antonio metro areas. The store remodels are expected to be completed before the 2012 holiday season. Connected Stores are remodeled big box stores that focus on connections, services and multi-channel experience through a total transformation of both the store and the operating environment.
The company expects total big box square footage in these combined test markets to be reduced by almost 20 percent through store downsizing and closures, while points of presence will increase by more than 20 percent.
"These changes will also help lower our overall cost structure," CEO of Best Buy Brian J. Dunn said in the release. "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."
Richfield Patch will update readers as more information becomes available. The Star Tribune reported that Dunn was speaking to investors this morning on Twitter.