Microsoft is getting out of the brick-and-mortar retail business.
The company announced Friday it will close down all of its 83 physical stores and switch to online only.
It will keep its London; New York City; Sydney, Australia and Redmond, Washington locations, but they will be reimagined as “experience centers,” the company stated. They will showcase Microsoft’s technology, such as Surface PCs, Xbox, “Minecraft,” Windows and Office, but they won’t necessarily sell anything.
The tech giant opened a bunch of locations in high-profile areas, such as Manhattan’s Fifth Ave. But during the pandemic, many of its stores have remained closed, and Microsoft (MSFT) is abandoning ship.
Microsoft, of course, is one of the pioneers of modern software, and it will continue to sell its products online: The tech giant estimates it reaches 1.2 billion people every month with its online stores at Microsoft.com, and for Xbox and Windows, combined.
“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,” said Microsoft corporate vice president David Porter.
Microsoft said that closing the stores will cost a pre-tax charge of about $450 million in taxes.
“This is a tough, but smart strategic decision for Nadella & Co. to make at this point,” Wedbush analysts wrote in a Friday note. “The physical stores generated negligible retail revenue for MSFT and ultimately everything was moving more and more towards the digital channels over the last few years.”
Wedbush said it maintained its outperform rating for Microsoft.