Best Buy Lower as Retailer Closes Its 41 Stores in Mexico

'The effects of the pandemic have been severe, and it is not viable for us to maintain our business in Mexico,' Best Buy said in closing its 41 stores there.
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Best Buy  (BBY) - Get Report shares fell sharply Tuesday, after the consumer-electronics chain said it’s shutting its 41 stores in Mexico.

Shares of the Richfield, Minn., retailer recently traded at $114.08, down 6.5%. They have climbed 30% year to date.

“Despite this extraordinary work [of our collaborators], the effects of the pandemic have been severe, and it is not viable for us to maintain our business in Mexico,” said Fernando Silva, president of Best Buy Mexico, according to the Yucatan Times.

The company said in its earnings announcement Tuesday that it took a restructuring charge of $111 million in the quarter ended Oct. 31, “primarily related to charges associated with the company’s decision this quarter to exit operations in Mexico and actions to better align its organizational structure with its strategic focus.”

In addition, Best Buy’s GAAP gross profit rate narrowed to 19% in the latest quarter from 22.5% a year earlier, “primarily due to $36 million of inventory markdowns associated with the company’s decision to exit its operations in Mexico,” it said.

Another bearish factor: Best Buy warned that strong shopping early in the coronavirus pandemic could pull down holiday sales.

As for the earnings report, Best Buy said non-GAAP profit for the quarter ended Oct. 31 came in at $2.06 a share, up 82% from the year-earlier quarter and ahead of the Wall Street consensus forecast of $1.70 per share.

Group revenue, Best Buy said, rose 16% to $11.35 billion, again topping analysts' forecasts of $11 billion. Same-store sales rose 22.6% from a year earlier, Best Buy said, while online sales nearly tripled. 

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