Best Buy is leaving the mall behind
Best Buy is closing all 250 of its small-format mall stores even as the retailer reported a stunning jump in same store sales during the holiday quarter.
According to Reuters, Best Buy CEO Hubert Joly told employees in a memo that margins at the stores had “compressed” and that “the cost of operations in our mobile standalone stores is higher than in our big box stores.” About 85 percent of Best Buy’s mobile shops are located within three miles of big box stores, the memo noted.
For the fourth quarter ended Feb. 3, same store sales at Best Buy increased 9%.
“The comparable sales growth of 9% in the quarter is the result of the strong execution of our strategy combined with better product availability, a continued healthy consumer confidence and positive macro conditions, strength in the gaming category, and a favorable competitive environment, as we benefitted from the exit or decline of certain competitors,” said Best Buy CFO Corie Barry.
Best Buy's net income dropped to $364 million, or $1.23 per share, from $607 million, or $1.91 a share.
Best Buy's impressive results speak "to the strength of Best Buy's brick-and-mortar footprint, as well as reinforces our view that consumers still value the store experience," said Moody's retail analyst Charlie O'Shea. "On the online front, Best Buy has eclipsed the 20% of total sales threshold, which is a clear indication of multi-channel strength."
The company said new tax legislation reduced earnings per share by $1.17. Revenue climbed to $15.36 billion.
“We are excited to report strong results for the fourth quarter and the year,” said Joly. “We are especially proud of our 9% comparable sales growth in the quarter, which brings our annual comparable sales growth to 5.6% for the year. Customers are responding very positively to our Best Buy 2020 strategy, and I want to enthusiastically thank all our associates for their great work in delivering these results. The level of energy and dedication to serving customers that I see across the company is truly inspiring.”
Best Buy has more than 1,500 stores in North America.