NEW YORK—Best Buy on Thursday reported a $1.7 billion fourth-quarter loss as sales slumped, prompting the world’s biggest electronics retailer to close stores and rethink its concept.
For the fiscal quarter ended March 3, Best Buy said that it lost $4.89 per share. The results were disastrous compared to a profit of $651 million, or $1.62 in profits per share, during the same period last year.
Best Buy and other big-box retailers have been squeezed by higher fuel costs as more consumers have opted to shop online. It is one of the reasons Amazon.com Inc. has seen a sales gain in recent months.
This week, Best Buy announced a plan to cut $800 million in costs, including closing around 50 stores in the United States.
In addition, the company is planning to remodel stores and open up to 100 small format stores this year. “We intend to invest some of these cost savings into offering new and improved customer experiences and competitive prices—which will help drive revenue,” said CEO Brian Dunn in a statement on Thursday.
On a conference call with analysts, the company said that it is testing the new smaller format store concepts in a few regions. These stores will be called “Connected Stores” and primarily sell tablet computers, mobile devices, and other gadgets to help consumers stay “connected.” They’ll also offer certain service plans not offered by online retailers.
The smaller stores should be set up in time for the holiday shopping season in 2012.