Best Buy is closing 50 stores in the U.S. in fiscal year 2013 and cutting 400 jobs, mostly at the company's Richfield, Minn. headquarters, as part of an $800 million cost-cutting effort.
Late on Thursday night, the company announced it will close five stores in Minnesota. The following locations are affected:
The closures are expected to affect roughly 300 employees when the stores are shuttered this fall.
"We are taking the necessary steps this next year to evolve our total retail store strategy, and make it even easier for customers to shop with Best Buy and access our services," Best Buy said in a company statement. "To achieve this, one of our first steps will be the closing of 50 U.S. Best Buy stores to fuel growth initiatives that will include Connected Stores that provide better service and product interactivity. We are deliberate and thoughtful when we make such decisions. We are working to ensure the impact to our employees will be as minimal as possible, while serving all customers in a convenient and satisfying way. We will announce details about specific store locations and timing for closings once they are finalized."
Earlier this year, Forbes magazine, which had named Best Buy their company of the year just a few years ago, predicted bankruptcy within the next few years.
University of St. Thomas business professor David Vang said Best Buy is in a dangerous position, because they have been slow to react to the changing electronics retail climate.
"They're still in the middle of course correction," Vang said.
Best Buy lost $1.7 billion, or $4.89 per share, for the period ended March 3. That compares with a profit of $651 million, or $1.62 per share, a year ago.
Best Buy has had its ups and downs in the ever-changing retail market. Over the past few years, the company has had success in mobile phone sales, selling nearly as many iPhones as Apple. To continue that momentum, Best Buy plans to open an additional 100 small-format Best Buy Mobile stores.
But at the Consumer Electronics Show in January, Best Buy CEO Brian Dunn admitted Best Buy stores have been a showroom for manufacturers who also sell directly to consumers. But Dunn said Best Buy is still a destination for shoppers after an initial purchase.
"Customers are coming in to buy things that interact with things they already own," he said.
Best Buy has said they plan to aggressively drive revenue and market share through promotions, expanding online sales and ensuring competitive prices. Dunn said that over time, "some of the (cost-cutting) savings will fall to the bottom line."
"Retailing in the old days was simple. And by old days, I mean about 2006," Dunn said in a recent blog post. "I am not saying it was easy. We've always had competitors trying to take our business, and we always will. But back then, our competitors looked just like us, with big stores and lots of boxes. And our consumers had simpler needs, they wanted to buy a product, take it home, plug it in and have it work. They didn't need it to talk with the rest of the technology in their home."
Minnesotans have a special connection to Best Buy, which started here 45 years ago as Sound of Music, an audio supply store that grew to 1,000 locations. The campus headquarters is located in Richfield and employs 4,000.