The Sam Goody Store at ZCMI Center mall in downtown Salt Lake City has closed, as part of a nationwide belt-tightening by store chain owner Best Buy Co.
Best Buy said Thursday it has closed about 110 Sam Goody and Suncoast stores Wednesday because of the decline in sales of prerecorded music and the slowdown in customer traffic at malls. The stores it closed included 90 Sam Goody music stores and about 20 Suncoast video stores whose leases expired or were operating on month-to-month leases.
"This is not a sign of our mall's health," said David Jensen, chief operating officer of ZCMI Center owner Zions Securities. "This is a sign of the economy and the industry, a general decline in mall foot-traffic nationwide."
The Suncoast store at Valley Fair Mall closed shortly after the holidays. The Crossroads Plaza Suncoast store was open for business Thursday, and employees there said they had received no indication that a closure was imminent.
Ditto for Sam Goody stores at the Fashion Place, Cottonwood, Valley Fair, Layton Hills, Cache Valley and Red Cliffs malls. The Suncoast stores at Cottonwood and University malls also remained open Thursday.
The Suncoast and Sam Goody brands are part of the Musicland group, which was struggling even before Best Buy bought it two years ago.
The closings bring total Musicland closings for the current fiscal year to about 160, the company said. The latest closings amount to about 5 percent of Musicland's total square footage.
Best Buy also raised its earnings forecast for the fourth quarter, saying strength in its core Best Buy stores more than offset weakness at Musicland stores.
Chief financial officer Darren Jackson said the company now expects fourth-quarter earnings of $1.05 to $1.10 per share. The consensus estimate of analysts surveyed by Thompson First Call was for $1.04 per share.
The company's shares jumped $2.40, or 9.8 percent, to $26.80 in morning trading on the New York Stock Exchange.
Company officials warned last month that they were taking a hard look at Musicland.
Chief executive Brad Anderson said Thursday that plans for new Musicland stores are on hold, and Best Buy would give an update on its plans for the group when it announces its fourth-quarter earnings in April. Musicland also includes Media Play stores.
Anderson also said the company is realigning Musicland into its domestic Best Buy operations, with a focus on the corporate staff, to boost productivity and profits. As part of that, he said, Musicland president Kevin Freeland's position has been eliminated and he has left the company.
Change is needed because of Musicland's performance this fiscal year, and the potential for continued deterioration in music sales, further reductions in mall traffic and increased competition in the coming year, Anderson said.
The financial impact of the closings was reflected in the company's previous forecast of operating losses of $80 million to $85 million for the fiscal year.
The Eden Prairie-based electronics retailer also announced at the Consumer Electronics Show in Las Vegas on Thursday that it expects total sales for the fiscal year that begins March 2 to increase 10 percent to 12 percent, primarily driven by the opening of 80 to 85 new stores. It will add about 60 Best Buy stores in the United States, including at least six in the New York City metro area, plus 13 to 15 Best Buy stores in Canada. It also plans to add four Future Shop stores in Canada and at least four new stores in its Magnolia Hi-Fi chain.
Best Buy said Thursday its total sales for December rose 10 percent to $4.24 billion from a year ago. The increase for the five-week period that ended Jan. 4 included the addition of 76 Best Buy stores in the past 12 months. Comparable-store sales increase by 0.4 percent. Those sales, which Best Buy defines as sales at stores open at least 14 months instead of the usual 12, are considered a leading indicator of a retailer's health.
"Sales improved as the month progressed," Anderson said. "Not only were there more last-minute shoppers, but sales continued to be strong after the holiday, leading to a record month."
Contributing: The Associated Press; Jenifer K. Nii