Best Buy Co Inc (NYSE:BBY) has unveiled plans to evolve as a consolidated retail chain henceforth. The company has plans to close 66 of its acquired Future Shop brand outlets in Canada, and transform 65 of them into holistic BBY brand stores. The company has robust ideas to close some stores and prosper its business endeavours, consolidating its net operations across Canada which is reportedly the second largest market of this promising US based electronics retailer. The company sighted lower profits by these reforms during this fiscal year.
BBY To Cut 1500 Jobs In Canada
The move to consolidate its operations will not only cost BBY dearly, as the profits wouldn’t me much this year; it would also affect in slashing 500 full time employees and 1000 part timers. The restructuring procedure would incur costs at a range of US$200-280 million to the company.
BBY also conveyed its interest to improve its holistic online operations carried out in Canada. This shall usher net expenditure estimated to about US$160 million. The expense would comprise launch of a wide gamut of home appliances and increase the number of staffs operating at varied stores.
BBY, the largest US retailer of electronics commodities conjectured that these changes would lead to cut in the EPS by 10 to 20 cents in this current fiscal year. Analysts at Thomson Reuters StarMine believe that EPS for fiscal 2016 would be $2.56. The analysts mentioned that both Future Shop and BBY sold similar products; hence, this consolidation makes sense.
The VP of Moody’s, Charlie O’Shea conjectured that all and sundry hopes that the long term benefits drawn from these store closings will certainly offset the short term costs incurred. Once restructured, BBY will operate across 136 large-format retailer stores and another 56 BBY Mobile outlets in Canada.
BBY Garners $400M From Cost Cutting Methodologies
Hubert Joly, CEO of Best Buy Co Inc (NYSE:BBY) claimed that the procedural shutting down of stores and cutting down jobs have benefitted the company with a reserve of $400 million over the span of the next three years.