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Best Buy To Restructure Operations

3/30/2006 12:38:00 PM Eastern

Minneapolis — Best Buy plans to reduce its operations to a single customer centricity operating model by the end of its current fiscal year in a “reorganization and restructuring” designed to enhance efficiencies and reduce costs.

In a conference call, president/COO Brian Dunn said the new structure would span from corporate headquarters to store level operations, and would help eliminate redundancies that resulted when the customer centricity initiative was layered over existing operations during its launch.


 Best Buy U.S. Stores Q4 Rev. Rises

Minneapolis — A combination of robust sales, continued gross profit gains and focused operating expense reduction paid off for Best Buy in the retailer’s fiscal fourth quarter, with U.S. Best Buy stores posting a 14 percent rise in revenue, hitting $9.4 billion, up from $8.2 billion a year earlier.

The changes will first be felt by “corporate and field leadership structures” this quarter, he said, while published reports suggest that store-level layoffs may follow as Dunn seeks to trim some $300 million in expenses over the next 12 months.

During this morning’s conference call, chief financial officer Darren Jackson acknowledged that Best Buy would face one-time severance and reorganization costs during its 2008 fiscal first quarter. “We’re taking out fixed costs,” he said.

The effort reflects the higher cost of customer centric store operations, and the company’s goal of achieving 7 percent operating margins within the decade.

Elsewhere during the call, which followed the release of Best Buy’s fourth quarter earnings, the company announced plans to open upwards of 80 new stores this year, add 200 Magnolia Home Theater in-store shops for a total of 300, and offer Best Buy for Business services at 120 additional stores.

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