Microsoft to close physical stores, take $450 million hit

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

The Redmond, Washington-based software giant said it would continue to serve customers online, with team members working remotely from corporate facilities.

A Microsoft spokeswoman told Reuters all current retail employees would be given an opportunity to remain with the company in different roles.

“Speaking over 120 languages, their diversity reflects the many communities we serve,” Microsoft Corporate Vice President David Porter said of the company’s retail employees in a statement. “Our commitment to growing and developing careers from this talent pool is stronger than ever.”The company also said it will rethink other spaces that serve all customers, including operating Microsoft Experience Centers in London, New York, Sydney, and Redmond campus locations.

“This is a tough but smart strategic decision for (CEO) Nadella & Co. to make at this point.

The physical 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.

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.