Best Buy is planning to close all of its roughly 250 smaller-format mobile phone stores, CEO Hubert Joly said to employees Wednesday in an internal memo, which was reviewed by CNBC.
The stores, which are about 1,400 square feet in size compared with Best Buy's bigger boxes of 40,000 square feet, are scheduled to close by the end of May, he said. The mobile stores are almost exclusively located within malls, with a few scattered throughout open-air strip centers.
"We feel good about the opportunity to retain customers and transition them to another one of our sales channels," Joly wrote to workers. "85 percent of existing standalone Mobile stores are within three miles of a Big Box store."
The Star Tribune first reported on the news Wednesday afternoon.
According to Joly, revenue from Best Buy's standalone mobile stores represents roughly 1 percent of the electronics retailer's overall sales, and the square footage of the stores altogether only accounts for about 1 percent of Best Buy's total real estate footprint.
The closures come as operating a store solely for mobile devices isn't as profitable as it once was, Joly explained. "We believe the best way to serve customers is to sell phones in channels where they have access to our whole range of connected devices."
Best Buy opened its first mobile phone store in 2006, prior to Apple's first iPhone launching.
As May approaches, Best Buy will offer employees the opportunity to find other jobs internally or transition to an "in-home advisor" role. Severance will be provided to those people who decide to leave the company, Joly said.
Already this year, a handful of other major retailers including Walmart, Toys R Us and Sears Holdings have announced plans to shutter stores, leaving a glut of vacant boxes behind, and many within malls. Best Buy made it clear, though, that its bigger boxes and its operations within Canada and Mexico won't be impacted by the news.
"The decision to exit this part of our business was made in keeping with our principle of continuous optimization," Joly said.
Best Buy is scheduled to report fourth-quarter earnings before the bell Thursday.