Best Buy to close all 250 small-format mobile phone stores
Best Buy is shuttering all 250 of its small-format mobile phone stores in the U.S., saying the locations have become less profitable.
A memo from the CEO to employees says the stores will close by the end of May and every effort will be made to retain the workers. Most of these stores are found in shopping malls.
The nation's largest consumer electronics chain launched the stores more than a decade ago, before Apple's iPhone was launched. The mobile phone business was growing quickly, with high profit margins.
But it said the business has matured and running the mobile stand-alones cost more than its larger stores, and that 85 percent of the stand-alones are within 3 miles of a big box store.
Best Buy says the stand-alone stores accounts for just over 1 percent of the company's total revenue.
The company said that operating profit margins narrowed in the holiday period due to compensation expenses and other investment.
Profitability concerns have weighed on the company's mobile-phone business and Best Buy says the mobile-phone stores will close at the end of May. The retailer began to open them more than a decade ago, before Apple Inc.'s first iPhone debuted, and at one point had more than 400 locations. But dozens have closed in recent months, and the business now represents just over 1 percent of total revenue.
"We believe the best way to serve customers is to sell phones in channels where they have access to our whole range of connected devices," Chief Executive Officer Hubert Joly said in a memo to employees.