Best Buy Canada To Consolidate Future Shop And Best Buy Stores; To Cut 1500 Jobs

(RTTNews) - Best Buy Canada, a subsidiary of Best Buy Co., Inc. (BBY) - which owns and operates both Best Buy and Future Shop stores - said that it will consolidate the Future Shop and Best Buy stores and websites under the Best Buy brand, and will eliminate about 500 full-time and 1,000 part-time positions. The plans to invest up to $200 million to build a leading multi-channel customer experience.

Best Buy Canada announced it has reviewed its real estate footprint to address the fact that a significant number of its Future Shop and Best Buy stores are located adjacent to each other, often in the same parking lot. The result of this review is the closure of 66 Future Shop locations, effective today.

Concurrently, an additional 65 Future Shop stores will be temporarily closed for one week as they begin their transition to the Best Buy brand. The company will now have a total of 192 locations across Canada, including 136 large-format stores and 56 Best Buy Mobile stores.

As a result of this consolidation, about 500 full-time and 1,000 part-time positions will be eliminated. The affected employees will receive severance, employee assistance and outplacement support.

"All Future Shop gift cards will be accepted at any Best Buy Canada location and at BestBuy.ca. Existing product orders, service appointments and warranties will continue to be honoured and Future Shop purchases to be returned or exchanged will also be accepted at any Best Buy," the company said.

Looking ahead, investments of up to $200 million dollars will be made in Best Buy stores and BestBuy.ca, to build a leading multi-channel customer experience. This multi-faceted strategy will include: launching major home appliances in all stores; working with vendor partners to bring their products to life in a more compelling way; increasing our staffing levels to better serve our customers; investing in the online shopping experience, such as expanding in-store pick-up areas for online customers and launching a ship-from-store program, making in-store inventory available to online customers across the country.

As a result of the restructuring, Best Buy Co. said it expects to increase its capital spending by up to C$200 million or about US$160 million over the next 12 to 24 months.

In addition, the Company expects to record restructuring charges and non-restructuring impairments in the range of C$250 to C$350 million (about US$200 to US$280 million), or GAAP earnings per share of US$0.41 to US$0.58. This includes C$175 million to C$225 million or about US$140 to US$180 million of cash charges - primarily related to future rent obligations and severance - that will be paid over the next five years.

The company also expects its GAAP and non-GAAP earnings per share to be negatively impacted in fiscal 2016 in the range of US$0.10 to US$0.20 due primarily to a temporary increase in operational expenses associated with consolidation activities and store disruptions resulting from its investments to support the Best Buy multi-channel customer experience. Due to the transitional nature of the majority of these costs, the Company does not expect this negative earnings per share impact to continue into future years.

BBY closed Friday's trading at $38.48, up $0.08 or 0.21%.