The largest U.S. specialty electronics retailer expanded quickly by opening big-box stores across the country, but shoppers have started using the stores as showrooms where they can test out products before buying them cheaper elsewhere.
To revamp the struggling chain, Best Buy plans to close 50 of its U.S. big box stores and cut 400 jobs in corporate and support areas to trim $800 million in costs by 2015.
The move comes as the company reported a $1.7 billion loss for the most recent fiscal quarter.
"How do we position the company so we're where our customers need us to be?" asked CEO Brian Dunn in a call on Thursday with analysts. "We're clearly going to have more doors and less square footage."
The company, which has about 1,400 U.S. locations, also plans to open 100 smaller and more profitable Best Buy Mobile stores throughout the country.
Best Buy is trying to avoid the fate of its rival Circuit City, which liquidated in 2009 after it struggled with the changing electronics landscape.
Sales of TVs, digital cameras and videogame consoles - once the bread-and-butter of electronics retailers - have weakened, while sales of lower-margin items like tablet computers, smartphones and e-readers have increased.
The rise in competition from Internet rivals like Amazon.com and discounters like Target also has hurt electronics retailers.
The Associated Press contributed to this report.