Best Buy Says It’s Trying to Sell Musicland Subsidiary
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Stung by plummeting CD sales, consumer electronics giant Best Buy Co. is putting its mall-based record stores on the auction block.
Minnesota-based Best Buy has hired an investment bank to shop its ailing Musicland division, which operates Sam Goody and other stores. The retreat comes just two years after Best Buy purchased the company for $685 million.
The move is the latest fallout from the recording industry’s nose-diving sales. So far this year, album sales have slid 9%, according to Nielsen SoundScan data, after an 11% drop last year.
In January, Best Buy announced it would close 110 Musicland stores, leaving it with about 740 Sam Goody outlets. The former president of the unit resigned. But Best Buy Chief Executive Brad Anderson said a strategic study determined that “Musicland would not be capable of meeting our original expectations.”
The retailing giant, which sells discounted CDs in its electronics stores, said Musicland would post a $78-million pretax loss for its recently ended fiscal year. Best Buy plans to record Musicland’s results as a discontinued operation when it reports today.
Best Buy shares were up 7 cents at $26.97 on the New York Stock Exchange.
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