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
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