Best Buy Co Inc (NYSE:BBY) Earnings Will Be Impacted By Store Closures In Canada


BestBuy

Best Buy Co Inc (NYSE:BBY) has disclosed that its earnings later this year will be hurt if the measures to restructure are completed. On Saturday, the retailer reported that the planned closure of its stores, as well as to look at pruning its Canadian operations, will lead to the company losing out on profits in the short term.

Best Buy Co Inc. proposes that the moves of consolidating its markets in the U.S., as well as in Canada, are set to bring down the earnings potential of the retail chain in the short term. Best Buy Co. continues to be the second largest players in the electronics retailing industry in the U.S.

Analysts believe that the consoldation makes sense as Best Buy and Future Shop often offered similar promotions and were so close to each other that they shared parking lots.

“We believe the long-term benefits of the store closings will more than offset the short-term costs,” said Moody’s Vice President Charlie O’Shea.

Store Closures in Canada

Best Buy Co Inc (NYSE:BBY) has announced that it will close down 66 of its Future Shops stores across Canada. It also aims to convert some 65 of them into flagship Best Buy brand stores, the announcement noted. This will mean that Best Buy will abandon its attempts with multiple brands and bring all to the single Best Buy brand. The move will also mean job loss. Employees who work full-time and part-time are likely to lose jobs to the tune of 600 and 1,000 respectively. This will allow the company to realize amounts of $200 million to $280 million in savings. The funds are essential for the company attempting to restructure at a fast-pace.

In Canada, Best Buy Co Inc (NYSE:BBY) is expected to add in nearly $160 million to improve online operations. The key is to improve the staffing in the operating stores. Simultaneously, the company will be able to launch home appliances as well as other initiatives, the company reported.

Such changes will affect the company, leading to loss of earnings per share.  Best Buy has warned that the loss will be in the region of 10 cents to 20 cents this year.

Lisa Ray

Lisa Ray primarily covers Retail and Healthcare. Lisa Ray has completed her MBA (Finance) and an avid market tracker. She is a stock market analyst who closely tracks US markets along with other global markets like India. She has been expressing her views for years about markets and also advises various clients.

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