Best Buy today posted a $1.7 billion
loss for the fourth quarter! Upon that announcement, shares of BBY (Best Buy)
dropped to $24.66, about a 7% decrease. However, Best Buy has plans in place to
turn things around, and they announced those today also.
First on the agenda is trimming the
fat. They plan to get rid of 400 corporate positions saving $800 million in the
process. Also, they are going to close 50 of their retail stores in the U.S.
However, that doesn’t really mean there will be fewer places to shop for Best
Buy merchandise. They also plan to open up 100 Best Buy Mobile locations, which
are smaller stores that turn a better profit. As the CEO put it, “We’re clearly
going to have more doors and less square footage.”
Best Buy is taking a lesson from their
failed former competitor Circuit City. They failed to keep up with the rapid
changes in the electronics market and finally went under in 2009. People are
buying more of the smaller, handheld electronics nowadays that don’t have a
very big profit margin. Also, there is so much more competition lately from
online retailers and discount department stores.
Therefore, Best Buy has decided to
change with the market. They will focus more on smaller, mobile device based stores
instead of their usual “big box” stores. In addition, they will make having a
highly-trained technical staff a priority. This way people will have a reason
to buy from them rather than online. There will be someone there to show them
how to use and get the most out of their new purchase.
No comments:
Post a Comment