US retailer Best Buy plans Europe exit
New York, April 30, 2013
US retailer Best Buy Company is selling its 50 per cent stake in a joint venture with Europe's biggest independent mobile phone retailer Carphone Warehouse Group back to its European partner for about 500 million pounds ($775 million).
The move is the latest sign the world's largest consumer electronics chain is scaling back its overseas ambitions to focus on its mainstay US business, which faces cut-throat competition from the likes of Wal-Mart Stores and Amazon.com.
The deal will strengthen Best Buy's balance sheet, simplify its business and improve its return on invested capital, CEO Hubert Joly said in a statement on Tuesday, adding that the timing and economics felt right for the deal.
Best Buy bought 50 per cent of Carphone's retail operations for about $2.1 billion in 2008 to tap the British firm's expertise in mobile phones and to act as a springboard for expansion across Europe.
While Best Buy was able to use Carphone's proficiency to boost its US mobile phone business, the plans for a chain of European megastores fell apart due to weak consumer spending, low brand recognition and competition from local chains.
Ultimately, in 2011, Best Buy scrapped plans for the chain of European megastores and decided to focus on Carphone's existing smaller format stores there. It also bought Carphone out of its US mobile phone joint venture for $1.3 billion.
On Tuesday, Best Buy said it had estimated its European unit to have sales of $5.5 billion to $5.6 billion, and "immaterial" diluted earnings per share, excluding items, in the current financial year.
Outside the United States, Best Buy currently operates in Canada, China, Europe and Mexico.-Reuters
More INTERNATIONAL NEWS Stories
- SAfricans remember Mandela with praise, prayers
- UN inspectors visit key Iran nuke site
- Ice storm causes blackouts, flight delays in US
- Ruling Congress party punished in India polls
- US proposes annual GCC defence summit
- Iran eyes better UAE ties after nuke deal
- Blatter calls for calm over Qatar 2022 problems
- German factory orders fall 2 per cent
- US upbeat as jobless rate hits five-year low
- US ‘does not recognize China's air defence zone’