Best Buy (NYSE:BBY) Up After News of Future Shop Closings

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By Jacob Maslow

Best Buy store frontBest Buy (NYSE:BBY) was up 1.3% in the first minutes of trading after the company announced it will be consolidating its Canadian division. Best Buy and its acquired Future Shop locations will now function under the Best Buy name.

Many Best Buy and Future Shop stores are operating side by side, so the company plans on closing 66 Future Shop locations permanently. The remaining 65 Future Shop stores will close down for one week during the transition. Once the transition is complete, Best Buy will have 192 locations in Canada.

President of Best Buy Canada, Ron Wilson, said the company would still honor warranties, gift cards and returns from Future Shop. However, the company will be cutting 1,500 jobs during the consolidation process. Approximately 70% of those employees are part-time workers. Employees were notified of the change during the weekly meeting on Saturday.

Best Buy says it plans on investing $160 million in Canada. The company expects to take a 10-20 cent loss from the temporary increase in operational expenses from the consolidation.

In the company’s most recent fiscal year, Best Buy earned $40.3 billion in revenue. Revenues were down from the previous year due to a 12% decrease in international sales. Best Buy says the decline was partly caused by unfavorable currency exchange rates as well as lost revenue from store closings in Canada.

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