In an effort to reduce expenses, Best Buy plans to close down 50 stores and set its focus on smaller stores selling mobile electronics. The company also plans to lay off 400 workers in both the corporate and support departments.
As part of a 3 year project, the superstore electronics chain selling everything from tvs, smartphones, to video games, will open 100 mobile small shops that will sell mostly smartphones, cellphones, and tablets in an effort to cut costs. The project is estimated to be $800 million and will initiate by the end of 2012.
"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. As part of our multichannel strategy, we intend to strengthen our portfolio of store formats and footprints," said Best Buy CEO Brian Dunn.
Headquartered in Minneapolis, the company already has a net loss of $4.89 per share in the fourth quarter. Revenues have been lower than expected with $16.6 billion.
Best Buy quickly expanded to become the largest U.S. electronics retail chain but has seen a decline in sales at stores and websites in recent months. Customers would enter stores, but purchases dipped as buyers tested devices but bought them cheaper from competitors.
"How do we position the company so we're where our customers need us to be?" asked CEO Brian Dunn. "We're clearly going to have more doors and less square footage."
Best Buy hopes to hold onto its position as the top retail for electronics with its strategy of smaller stores. The new test stores will open in Minneapolis and San Antonio with 20% less square footage. The company remains optimistic as a previous test store, which opened in Las Vegas, provided positive results.