Microsoft to close physical stores, take $450 million hit

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

Microsoft logo (Pixabay)

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

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

It was not immediately clear if Microsoft's move would lead to any layoffs. The company also said it will rethink other spaces that serve all customers, including operating Microsoft Experience Centers in London, New York City, 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-led lockdowns, have seen a huge surge in online demand amid stay-at-home orders.

Reporting by Akanksha Rana.