Microsoft to close physical Microsoft stores take $450 million hit

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Microsoft stores
Microsoft stores

Microsoft to close physical Microsoft stores take $450 million hit

Retail Microsoft stores would close and take a related pretax asset impairment charge of $450 million in the current quarter said Microsoft Corp said on Friday.

“This is a tough but smart strategic decision for (CEO) Nadella & Co. to make at this point. The physical Microsoft stores generated negligible retail revenue for Microsoft and ultimately everything was moving more and more towards the digital channels over the last few years,” Wedbush analyst Dan Ives said in a note.

Microsoft said the company’s retail members will continue to serve customers from Microsoft corporate facilities and remotely providing sales, training, and support. The company will continue to invest in its digital storefronts on Microsoft.com, and stores in Xbox and Windows, reaching more than 1.2 billion people every month in 190 markets, the American multinational technology company said in an official release today.

There are 83 Microsoft stores worldwide, including 72 stores in the U.S and several others abroad.

The company said it will also reimagine spaces that serve all customers, including operating Microsoft Experience Centers in London, NYC, Sydney, and Redmond campus locations. It said the closing of Microsoft Stores’ physical locations will result in a pre-tax charge of approximately $450M, or $0.05 per share, to be recorded in the current quarter ending June 30, 2020. The charge includes primarily asset write-offs and impairments.

Microsoft Corporate Vice President David Porter said: “Our sales have grown online as our product portfolio has evolved to largely digital offerings, and our talented team has proven success serving customers beyond any physical location.” 

“We are grateful to our Microsoft Stores customers and we look forward to continuing to serve them online and with our retail sales team at Microsoft corporate locations,” he said.

Retailers, whose stores shuttered in mid-March due to coronavirus-prompted lockdowns, have seen a huge surge in online demand amid stay-at-home orders.

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