Published: Fri, March 02, 2018
Finance | By Cynthia Curry

Best Buy to close all 250 of its smaller, mobile phone stores

Best Buy to close all 250 of its smaller, mobile phone stores

"What's driving the result is us - I'll say, it's our strategy and our execution", Best Buy CEO Hubert Joly said during a conference call Thursday.

But it said the business has matured and running the mobile stand-alones cost more than its larger stores, and that 85 per cent of the stand-alone stores are within 3 miles of a big box store. The stores contribute just 1% to the company's revenue-and that'll drop to zero when Best Buy shuts all the USA locations on May 31 (its 52 Canadian mobile stores will remain open).

Any employees working at Best Buy Mobile locations will receive help from Best Buy in finding other jobs within the company, and those that choose to leave after May 31 will be given severance packages.

Those efforts have boosted the company's sales at stores open at least a year in six of the past eight quarters.

Best Buy reported better-than-expected same-store sales for the fourth quarter of fiscal 2018, as the electronics retailer saw stronger sales in the gaming category and a more "favorable competitive environment" through the holidays. People might be more inclined to purchase from a 40,000-square-foot retail location than a 1,400-square-foot shop that only sells mobile phones.

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With a windfall tied to lower corporate tax rates, the retailer handed out bonuses of $1,000 to full-time employees and $500 to part-timers, many of them front-line workers at its stores.

The company's overall sales at established stores rose 5 percent, fueled by a 9 percent gain at its low-price chain Old Navy. It expects 2021 adjusted earnings in a range of $5.50 to $5.75 per share, mostly due to the recent tax overhaul.

Revenue reached $15.4 billion during the quarter, a 14% increase over the year-ago quarter. Removing an extra week of sales in the quarter, same-store sales rose a still-robust 8%, the company said. Analysts polled by FactSet predict 2019 earnings of $4.71 per share.

Looking to the full year, Best Buy said it expects same-store sales to climb as much as 2 percent.

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