Best Buy plans to close 50 big-box stores as its videogame and DVD sales continue to tank.
Times are tough for big box retailer Best Buy, which reported a net loss of $1.7 billion for the quarter ended March 3, 2012, an ugly number by any measure and particularly galling when compared to the $651 million in profit reported for the same period in 2011. The results have forced the company to undertake measures to reduce costs by $800 million by the 2015 fiscal year, including $250 million in reductions in 2013. As part of that plan, approximately 400 people will be laid off from the company's corporate and support areas.
Best Buy's biggest problem appears to be its entertainment division, which covers sales of DVDs and videogames. Domestic division sales losses hit a whopping 21 percent for the quarter, an acceleration of the 14.3 percent loss suffered over the same period in 2011. Best Buy's entertainment division is obviously being punished by the growth of digital sales and services like Netflix, while the company as a whole is reportedly suffering at the hands of consumers who use it as a "testing ground" before making their purchases at discount retailers like Walmart and Amazon.
To help combat this trend, the company is pulling the plug on 50 big box locations in the U.S. and shifting focus to its smaller-format Best Buy Mobile stores. 100 Best Buy Mobile stores are expected to open in the U.S. in 2013 and the total number is expected to grow from 305 today to between 600 and 800 by the 2016 fiscal year.
Source: Business Insider