The bad news for Best Buy continues — the company just reported a $1.7 billion loss in its fiscal fourth quarter 2012 (the quarter ended for Best Buy on March 3rd), compared to net income of $651 million one year ago. Furthermore, the consumer electronics giant announced it has plans to close 50 stores in the US in an effort to improve its business performance.
It's worth noting that a major part of this quarterly loss came from Best Buy's purchase of Carphone Warehouse's share of Best Buy Mobile's profit sharing agreement; there were also restructuring costs due to last fall's shutdown of Best Buy stores in the UK. Overall, this amounted to $2.6 billion in costs which definitely hurt Best Buy's bottom line this quarter. Otherwise, revenues of $16.6 billion represented a three percent increase over the year-ago quarter. Full year performance was also down year-over-year — overall, the company posted a lost of $3.36 per share compared to last year's diluted earnings per share of $3.08.
As for the store closure, Best Buy hasn't announced which stores it will close, nor when those stores will shut down, but this is just part of a major restructuring plan that calls for $800 million in cost reductions by FY 2015. The company plans to save $300 million in retail store reductions, another $300 million in corporate and support structure reductions, and $200 million in "cost of good sold." Best Buy isn't just planning cuts, though — it's also working to remodel two stores into its "Connected Store" format. Based on the results of pilots conducted over the last two years, these stores will focus on "connections, services and multi-channel experience through a total transformation of both the store and the operating environment." To go along with these redesigns, the company is also planning to open 100 new Best Buy Mobile stores over the next year, and hopes to have between 600 and 800 such stores by 2015 (up from about 300 now). It sounds like Best Buy has a long-term plan to improve profitability, but that doesn't help those working in the 50 stores the company will be shutting down.