Shutting down or rebranding each one of Future Shop’s outlets across Canada has cost parent company Best Buy (NYSE:BBY) US$191 million, according to financial results released Thursday (May 21).
And Best Buy, which acquired Vancouver-founded Future Shop in 2001 for C$580 million, doesn’t expect the restructuring costs to end there.
The Minnesota-based electronics retail giant has informed investors it expects to pay out an additional US$10-90 million to cover consolidation expenses over the coming quarters.
In March, Best Buy announced it would permanently shutter 66 Future Shop locations and convert the remaining 65 locations into Best Buy outlets.
The closures came after Best Buy determined many of its own stores were in close proximity to Future Shop locations, meaning it could reduce costs without losing out on potential customers.
But much of the US$191 million price tag associated with the store closures has come from penalties Best Buy already expected to pay out for ending leases prematurely as well as employee severances.
B.C. lost nine Future Shop stores in March, while another 13 have been, or are in the process of being, rebranded as Best Buy outlets.
Thursday’s financial results revealed gross profit from Best Buy’s international segment has fallen 29.4% — from US$204 million to US$144 million — compared with the first quarter of 2014.
The U.S. segment of the business, meanwhile, saw its gross profit rise 1.4%, from US$7.78 billion in Q1 2014 to US$7.89 billion in Q1 2015.
