Update: Best Buy to Close Stores, Cut Employees

Best Buy officials announced Thursday they will close 50 of their big box stores  and lay off 400 employees at corporate and support levels, according to a news release.

Although they did not say initially which stores would close, later Thursday, it came out that stores in Edina, Brooklyn Center, Rogers, Lakeville and Hutchinson will close, impacting more than 300 workers, according to Kare 11. However, Best Buy also announced it plans to open 100 smaller and more profitable "Connected Stores," according to KSTP.

"This is not an easy decision to make," Best Buy said in the Kare11 article. "We recognize the impact this news has on the people who deserve respect for the contributions they have made to our business, and for customers who shop these stores today. We are working to ensure the impact to our employees will be as minimal as possible, while serving all customers in a convenient and satisfying way."

The original annoucement came after the Richfield-based company released its fourth quarter earnings, which showed a $1.7 billion loss in revenue.

Shakopee has one store in the Southbridge area.

The news of closures and downed profits are not a surprise to many, as Best Buy reported shortfalls after its third quarter in 2011 as well. In January 2012,  and also suggested it was getting closer and closer to bankruptcy every day.

Best Buy's retail store strategy going forward is to increase points of presence, while decreasing overall square footage. Based on results from store pilots conducted in 2010 and 2011, Best Buy will be deploying "at-scale" market tests of its new Connected Store format in the Twin Cities and San Antonio metro areas. The store remodels are expected to be completed before the 2012 holiday season. Connected Stores are remodeled big box stores that focus on connections, services and multi-channel experience through a total transformation of both the store and the operating environment.

The company expects total big box square footage in these combined test markets to be reduced by almost 20 percent through store downsizing and closures, while points of presence will increase by more than 20 percent.

"These changes will also help lower our overall cost structure," CEO of Best Buy Brian J. Dunn said in the release. "We intend to invest some of these cost savings into offering new and improved customer experiences and competitive prices --- which will help drive revenue. And, over time, we expect some of the savings will fall to the bottom line."

To read the entire news release click here. 

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