Best Buy To Close 50 Stores, Lay Off 400

The Minneapolis-based retail giant said Thursday it plans to close 50 stores in the U.S. over the next 12 months after reporting disappointing fourth-quarter financials for the period ended March 3, according to the company.

The big box store closures are part of a plan to reduce costs by $250 million in fiscal 2013 and $800 million by fiscal 2015, according to the Minneapolis-based retail giant.

"These changes will also help lower our overall cost structure. 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 Brian Dunn, CEO of Best Buy, in a statement. "Over time, we expect some of the savings will fall to the bottom line. At the same time, we will continue to accelerate our key initiatives -- growing connections and services, expanding our digital capabilities and growing our business in China.

Best Buy shares were trading at $24.71 Thursday afternoon, down $1.91 per share or 7.2 percent.

In addition to the store closings, Best Buy expects to eliminate 400 corporate and support jobs and make further internal cuts in IT services, procurement on non-merchandise purchases and outside consultant services, according to the company.

Also, Best Buy plans to test a new "at-scale" Connected Store format in Minnesota and San Antonio, which are remodeled big box stores to be 20 percent smaller, the company said.

The company also plans to introduce a new labor model for its big stores before the 2012 holiday season that provides increased training and more financial incentives for meeting customer service and business goals, according to Best Buy. The model is expected to be based on the one in place for the company's small-format Best Buy Mobile stores.

Meanwhile, as Best Buy shutters some of its big stores, it announced plans to open 100 additional Best Buy Mobile stores in the U.S. over the next 12 months. Best Buy reported a net loss of $1.7 billion or $4.89 per share in the fourth fiscal quarter ended March 3, compared to net income of $651 million or $1.62 per diluted share, in the year-ago period. Sales increased to $16.63 billion in the fourth quarter, compared to $16.08 billion in the year-ago quarter.

The fourth-quarter results included a $2.6 billion charge related to the purchase of Carphone Warehouse Group's share of the Best Buy Mobile profit share agreement, an impairment chart for the write-off of business in Best Buy Europe, and restructuring charges primarily associated with the closing of stores in the U.K., according to Best Buy.

Excluding the charges, Best Buy would have earned $2.47 per share. Analysts had expected earnings of $2.16 per share on $17.20 billion in sales for the fourth quarter.