Best Buy Co Inc , the No. 1 U.S. consumer electronics retailer, on Wednesday said it will shut 250 small mobile phone stores in malls as it looks for ways to operate profitably and turn around its business amid intense competition.
The stores, which contributed just over 1 percent to the company’s overall revenue and 1 percent to its overall square footage, will be shut effective May 31.
The mobile stores are each about 1,400 square feet while a typical Best Buy store occupies about 40,000 square feet.
The Minneapolis-based retailer said it will continue to sell mobile phones through its 1,000 U.S. big box stores and online.
Best Buy began opening these stores more than a decade ago, before Apple Inc’s iPhone was launched and when margins in the business were high, Best Buy Chief Executive Hubert Joly told employees in a letter, a copy of which was seen by Reuters.
“Fast forward to 2018 and the mobile phone business has matured, margins have compressed and the cost of operations in our mobile standalone stores is higher than in our big box stores,” Joly said.
The company declined to disclose how many employees will be affected by the decision.