Best Buy Cuts Jobs and Stores in Musicland

Best Buy (BBY - Cramer's Take - Stockpickr) laid off about 700 employees last week as part of a restructuring of is Musicland chain, the company said in its quarterly report filed this week.

The job cuts, which included both full- and part-time employees, were the outgrowth of a wave of store closings by the electronics retailer. The company closed 107 stores operated by its Musicland division last week. Included in that total were stores operating under the Musicland, On Cue, Sam Goody's and Suncoast brands.

Also as part of the restructuring announced last week, Best Buy eliminated the position of president of Musicland. Former Musicland president Kevin Freeland has left the company, Best Buy said last week. Best Buy plans to have its domestic Best Buy division oversee the operations of Musicland.

The store closures encompass about 450,000 square feet, or about 5% of the square footage operated by the Musicland division. They also represent about 8% of the 1,306 stores the division operated at the end of its last fiscal quarter. Best Buy has closed about 160 Musicland stores over the course of its 2003 fiscal year, which ends March 1.

With CD sales suffering, Musicland has struggled over the last year. The division's comparable-store sales, which measure results at stores open for more than one year, fell 11.5% in the company's fiscal third quarter and 14.7% in December. Best Buy has estimated that Musicland will post an operating loss of between $80 million and $85 million for the current fiscal year.