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June 26, 2020

Microsoft to Shut Physical Stores, in a Decision that Will Cost it $450 Million

"We are excited for this new day"

By CBR Staff Writer

Microsoft is shutting down its physical shops around the world, a shock decision that will result in a $450 (£361) million pre-tax charge.

The move, announced today, comes just 12 months after it opened a new store on Oxford Circus, London with much fanfare.

The step will cost it $450 million in asset write-offs and impairments. These will be recorded in the quarter ending June 30, 2020.

Staff will be reallocated to digital roles.

Microsoft has 82 physical stores globally, according to a list on its website.

Microsoft Chief People Officer Kathleen Hogan said the move would lead to an ” infusion of talent [that is] invaluable for Microsoft.”

David Porter, corporate VP, Microsoft Store, tried to put a brave spin on the painful decision, saying in a LinkedIn post: “Our hardware and software sales have continued to shift online.

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“We are excited for this new day, the future of our business, and the ongoing opportunity and development of every team member of Microsoft Store.”

Things can change fast (nobody expects a pandemic, which forced the stores’ closure in March of this year), but the decision represents a fresh blow to an already struggling bricks-and-mortar retail sector.

Just 12 months earlier Porter had said: “A flagship store in London has long been part of our vision for our physical and digital store presence.

“This opening represents another step in our journey to meet our customers – from consumers to businesses – wherever they are.”

Microsoft added in a release today: “The company will also reimagine spaces that serve all customers, including operating Microsoft Experience Centers in London, NYC, Sydney, and Redmond campus locations.”

Asked what “reimagine” meant, Microsoft’s PR team referred Computer Business Review back to a press release that did not define it.

Pressed again, they said they did not have information on what it meant. We can only speculate, but it appears that the four stores named above may win some form of reprieve, if not continuing in their full-fat form.

The London Microsoft store spans 21,932 square feet over three floors, and until its March closure included retail and events space.

We’ll update this piece when we know more.

 

 

 

 

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