Despite a ton of cash and strong profits, Best Buy is scaling back its physical footprint to better position itself for the future. The company has 450 leases coming up for renewal in the next 3 years.
- Secular decline in retail accelerated: Best Buy CEO Corie Barry said that moving forward there will be higher thresholds on renewing leases. As part of the review process, the retailer has already closed 40 large format locations in the past two years, and plans to exceed that pace moving forward. BestBuy has also been reducing the length of their average lease term.
- What this means: Best Buy ended 2020 with 1,159 stores in North America, which is down from a peak of 1,779 in 2014. The looming store closures likely reflects the changes the pandemic has caused to shopper behavior. Consumers are not only shopping more online for convenience, but also opting to pick up orders in parking lots. [YahooFinance]