Best Buy, which has often been seen the retail group admired by consumer electronics retailers in Australia, has announced a $1.7 billion loss for its fiscal fourth quarter that ended March 3, 2012. The Company is also planning to close 50 of its big-box stores. In the same period last year the Company reported a profit of $651 million.The news comes as Dick Smith moves to close up to 100 stores and Harvey Norman struggles to hold onto sales. It was only 3 months ago that the CEO of Best Buy, Brian Dunn, said he was interested in investing in Australia via a partnership.
“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,” says Best Buy CEO Brian J. Dunn.
“As part of our multi-channel strategy, we intend to strengthen our portfolio of store formats and footprints – closing some big box stores, modifying others to our enhanced Connected Store format, and adding Best Buy Mobile stand-alone locations – all to provide a better shopping environment for our customers across multiple channels while increasing points of presence, and to improve performance and profitability.”
Best Buy, which says the loss is partly due to restructuring charges, will open 100 small Best Buy mobile outlets throughout the U.S. Best Buy says sales of TVs, digital cameras and video game consoles have declined, while sales of tablets, smartphones and e-readers have increased.
Best Buy said that revenue rose 3 percent to $16.08 billion in the quarter, but it missed Wall Street’s $17.18 billion estimate. Revenue at stores open at least a year slipped 2.4 percent. But it was a smaller drop than a year earlier when the company reported a 4.7 percent decline, according to the AP.
Best Buy lost $1.23 billion for the entire year, compared with a profit of $1.28 billion the prior year.
According to the AP, Best Buy expects to reduce about $250 million of its costs in fiscal 2013 with fiscal 2013 revenue of $50 billion to $51 billion.
“The firm is taking incremental steps to address its strategic challenges,” Goldman Sachs analyst Matthew Fassler tells the AP. “That said, the soft close to the quarter, and subdued sales guidance, suggest that competitive pressure may be drifting into market share as well as margin, with Apple stores and Amazon.com the two most likely culprits.”