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Best Buy Store Closures - The Dominoes Fall?

Summary

Best Buy just announced another store closure, this time in Minnesota.

This is one closure of what could be many this year as leases expire.

This trend is widespread in the retail space, as many companies are trimming locations to become leaner.

Best Buy (BBY) Announces Store Closure

Just yesterday, it was reported that a Best Buy store will not be continuing its lease and will be closing down its store in Willmar, MN. This is not the only Best Buy store to be closing however.

Looking back through news and announcements we see that this may be a trend as more consumers shop online for electronics through retailers like Amazon.com (NASDAQ:AMZN) and superstores like Costco Wholesale (NASDAQ:COST) and Wal-Mart (NYSE:WMT).

Why Close a Store?

Following the announcement to close the location in Willmar, MN, Best Buy spokesperson Bianca Jones cited multiple reasons for a store closure decision:

  • change in consumer shopping patterns at the retail center
  • rising building operation costs at a retail center
  • declining sales in the retail center
  • overall strength in the retail center

As revenues declined for Best Buy, many locations were closed in 2015 including locations in Colorado, Wisconsin, and Massachusetts.

The Other Closure Consideration: Expiring Lease?

One of the major commonalities is that many stores closed in 2015 had expiring leases. The Minnesota location whose closure was just announced also has an expiring leases. The Iowa location that just closed in June had an expiring lease.

Best Buy CFO, Sharon McCollam said a few interesting...


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