Best Buy
The sign outside a Best Buy store is seen on a snowy day in Boulder, Colorado March 3, 2015. Reuters/Rick Wilking

(Reuters) - Best Buy Co Inc (BBY.N) plans to close some stores and consolidate its operations in Canada, the U.S. electronics retailer's second-largest market, in a move that will hurt earnings this year, the company said on Saturday.

The retailer said it will close 66 of its Future Shop brand stores in Canada and convert 65 of them to Best Buy brand stores. The move to a single brand will cut 500 full-time and 1,000 part-time jobs, and cost the company about US$200 million to US$280 million in restructuring charges, Best Buy said.

Best Buy also said it plans to spend C$200 million (US$160 million) to improve its online operations in Canada, increase staffing at remaining stores, and launch a range of home appliances, among other initiatives.

The largest U.S. electronics retailer expects these changes to cut earnings per share by 10 cents to 20 cents in the current year. That is up to 8 percent of the average analyst estimate for fiscal 2016 earnings per share of $2.56, according to Thomson Reuters StarMine.

Analysts said the consolidation made sense as Best Buy and Future Shop often offered similar promotions and products. Some of their stores were so close to each other that they shared parking spaces.

"We believe the long-term benefits of the store closings will more than offset the short-term costs," said Moody's Vice President Charlie O'Shea.

After the restructuring, Best Buy will be left with 136 large-format stores and 56 Best Buy Mobile stores in Canada.

Since 2012, Best Buy has removed layers of management, cut jobs, shut stores and boosted cash reserves to grapple with intense competition from Inc (AMZN.O) and other online retailers.

The efforts resulted in a better performance for Best Buy during the 2014 holiday season. Earlier this month, Chief Executive Hubert Joly said Best Buy planned a cost-cutting campaign to find savings of $400 million over the next three years.

Other retailers that have scaled back operations in Canada, or plan to do so, include Target Corp (TGT.N) and Sony Corp (6758.T). Target has said its Canadian business suffered from poor locations and customer complaints.

(Reporting by Nandita Bose in Chicago; Additional reporting by Euan Rocha and Solarina Ho in Canada; Editing by Tiffany Wu)