1,000 jobs at risk in Carphone Warehouse move

 

More than 1,000 jobs were in jeopardy today after a push by Carphone Warehouse and America's Best Buy to crack the UK electronics market ended in failure.

Best Buy's 11 "big box" stores will close by the end of 2011 after it made losses of £46.7 million in the six months to September and Carphone said current trading conditions meant the venture did not have a viable future.

Carphone and its partner Best Buy launched their joint-venture in 2008 with a promise to shake up a market dominated by Currys and PC World owner Dixons Retail and Comet, although the first store did not open until 2010.

Best Buy originally planned 200 stores in Europe by 2013, and hoped to undercut the competition on price and offer American-style customer service.

Despite a £1.1 billion investment, its launch coincided with the downturn, which saw a substantial drop in demand for sales of TVs, video consoles and computers, while the growing popularity of the internet added to its woes.

Other retailers such as Comet owner Kesa Electricals and Dixons have issued profit warnings in recent months.

Carphone said it hopes to find work for the "large majority" of 1,100 staff within its 805 stores in the UK, which are increasingly focusing on selling more electrical goods such as smartphones and tablet computers, particularly through its Wireless World format.

Best Buy Europe chief executive Andrew Harrison said: "The technology world has changed substantially since 2008 and we are confident we will best serve our customers by investing in a single brand and format rather than two."

Best Buy UK currently has big box stores in Aintree, Bristol, Croydon, Derby, Enfield, Hayes, Hedge End, Merry Hill, Nottingham, Rotherham and Thurrock.

Best Buy UK expects further losses of between £25 million and £30 million before the shops are closed. The cost of closing the stores will be up to £75 million, while write-downs of £45 million in the value of the business are also expected.

Kate Calvert, an analyst at Seymour Pierce, said: "It's been incredibly difficult for anyone to make any money out of electricals in recent years.

"They tried to launch at a very difficult time - anything that involves selling big-ticket items at the moment is a struggle."

She added that Carphone also lost the element of surprise by flagging up its launch in advance, giving rivals such as Dixons time to sharpen their offers.

Meanwhile, Carphone also announced it had sold its share in Best Buy Mobile, its US mobile phones joint-venture with Best Buy, for £838 million.

The sale will trigger a £235.8 million pay-out for Carphone Warehouse founder Charles Dunstone, who owns a 29% stake in the company.

Carphone also reported that its European business suffered a 3.9% like-for-like sales decline in the half-year.

It said the pre-paid mobile phone market remained weak and it had suffered as more customers moved on to 24-month contracts in the UK. Underlying profits at the division more than halved to £20 million.

PA

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee