Microsoft takes $450m hit as it closes store network

Global technology titan Microsoft has announced it is to close its physical retail estate for good, opting not to reopen the stores that were temporarily shuttered due to the coronavirus pandemic.

Microsoft’s main website currently lists 82 physical sites on its store location page, and it said the move to close these premises will result in a pre-tax charge of approximately $450 million, or $0.05 per share. The charge will be recorded in its current financial quarter ending June 30, and it includes primarily asset write-offs and impairments.

The company also said it will change the function of its flagship sites in London, New York City, Sydney, and on its Redmond campus in the US. They will become Microsoft Experience Centres and will not sell products.

Products will only be sold online, and will provide training and support virtually. Microsoft said it will continue to invest in its digital storefronts on Microsoft.com, and stores in Xbox and Windows, which reach over 1.2 billion people every month in 190 markets.

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 store customers and we look forward to continuing to serve them online and with our retail sales team at Microsoft corporate locations.”

The tech company said the retail team members will continue to serve consumers, as well as small business, education, and enterprise customers, virtually.

New services in the pipeline as Microsoft continues to invest in its retail proposition include one-to-one video chat support, online tutorial videos, and virtual workshops.

“It is a new day for how Microsoft store team members will serve all customers,” explained Porter.

Microsoft’s London flagship opened to much fanfare at Oxford Circus in 2019. At the time of the opening, last July, Microsoft UK CEO Cindy Rose said the company’s ambition was to create a place “where people can do so much more than just shop”.

“It's a place where they can learn new skills, where businesses can grow and where we can build long term links with the communities in our neighbourhood,” she commented.