Carphone's Best Buy deal at risk as losses rise

Carphone Warehouse's foray into "Big Box" stores through its Best Buy UK partnership has been thrown into doubt after losses surged and managers admitted they were "evaluating" the future of the chain.

The venture between Carphone and the US electronics retailer Best Buy has opened 10 superstores over the past 18 months. It emerged yesterday that losses at the division almost tripled to £62.2m last year. The company expects further losses this year.

The operation suffered after "significant investment in developing the brand", as well as a slowdown in consumer electronics in the UK and fierce competition from rivals.

The company, run by Roger Taylor, said yesterday: "Following this launch period, we are in the process of evaluating the next steps for this business, and will provide further guidance once this process is complete." One analyst said the general consensus was that Best Buy "is likely to exit the UK and the superstores will be shut down".

Roger Gregory, research director at Planet Retail, said: "It would be a huge blow to Best Buy's international expansion plans if they were to walk away now."

The launch of the "Big Box" stores had been troubled from the first. The venture had planned its initial launch in 2008 but was delayed two years because of the credit crunch. When it finally opened in Thurrock, Essex, last year "the market had changed and Dixons had got its act together", Mr Gregory said. The company had targeted 100 superstores by 2013, later revised to 80. It is still unclear how the companies will proceed.

The analyst said the partnership had been hugely beneficial in other ways but Best Buy UK "was the wrong store format, in the wrong market at the wrong time".

Best Buy Mobile in the US did perform strongly, with the European business's share of profits more than doubling to £97.9m. The business, which plans to open another 150 stores this year, predicted a further 20 per cent growth in phone connections this year.

Carphone Europe did grow, with earnings before interest and taxation up 18 per cent to £134.6m in the year to the end of March. This came with the rise of smartphones, which accounted for up to 90 per cent of contract sales.

"We see internet connectivity and smartphone features becoming the norm across virtually all mobile devices," the group said. Its joint venture with Virgin in France also moved into profit.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
ebooksNow available in paperback
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

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Day In a Page

Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum