Best Buy, or not apparently. Edit, But best buy, err buy?

Really2

http://www.reuters.com/article/2011/11/07/bestbuy-carphone-idUSL6E7M705U20111107

Failed UK retail project axed

* To close Best Buy-branded UK megastores

* To create mobile venture for emerging market expansion

* Carphone to return cash to shareholders

* Carphone shares up 1.5 pct, outperform retail sector

By Mark Potter

LONDON, Nov 7 (Reuters) - U.S. electricals retailer Best Buy Co Inc is buying its British partner out of a fast-growing U.S. mobile phone joint venture for $1.3 billion and scrapping plans for a chain of European megastores, it said on Monday.

The moves are the latest sign Best Buy is scaling back its overseas ambitions to focus on its main U.S. business, which faces stiff competition from discounters and online retailers. Earlier this year, the U.S. group dropped plans for Best Buy-branded stores in China and Turkey.

The decisions also underscore the gloomy outlook for European retailers as consumers there grapple with rising prices, subdued wages growth and government austerity.

Best Buy said it would buy out Carphone Warehouse Group Plc from a profit share agreement of their Best Buy Mobile venture in the United States, which has been benefiting from soaring demand for smartphones like Apple's iPhone.

The deal, along with a new venture aimed at replicating Best Buy Mobile's success in emerging markets, helped to move attention away from the closure of the pair's loss-making megastores business in Britain, as well as a larger-than-expected drop in Carphone's first-half earnings.

At 1105 GMT, Carphone shares were up 1.5 percent at 350 pence, outperforming a 1.3 percent fall in the STOXX Europe 600 European retail index .

But Best buy bag Carphone Warehouse off the Back of it in the US.

michaels

Seemed like a bad moment to choose to get in to big box electricals but I guess it was a bet on a recovery a couple of years ago - the recovery never happened and supermarkets and the internet destroyed margins (on all electricals except mobiles here consumers still seem to be taken in by the monthly payment model).

Graham_Devon

Personally I feel were past saturation point in the electrics market. There are just too many retailers offering the same products. What with the internet too, it's just making things harder.

Really2

I can remember the thread when they opened their first site.
It was meant to be the death nail for DSG.
I don't think many thought Best buy would be gone first.

DSG ain't out the woods, but the best buy thing seemed to be to out DSG, DSG.
So basically to be cheaper than a sort of failing retail model, guess they sort of won by closing first.

FTBFun

They were hit pretty hard during the riots - the Croydon store was properly cleaned out, carpets and all.

gailey_2

saw on news bad news is job losses.

bristol store hasent even been open full year but does have lot of competition at mall/cribbs with huge walmart, currys, comet and pc world, john lewis.

think news said approx 1000 job losses.

plus large units hard to rent have retail park near me half empty as big w and tj hughues shut down.

electricals is competative i prefer to buy online as cheaper.
but like to go instore and try first.

IronWolf

Really2 wrote: »

I can remember the thread when they opened their first site.
It was meant to be the death nail for DSG.
I don't think many thought Best buy would be gone first.

DSG ain't out the woods, but the best buy thing seemed to be to out DSG, DSG.
So basically to be cheaper than a sort of failing retail model, guess they sort of won by closing first.

Dixons 1 year bonds are yielding about 16% now, I wanted to get some but was informed its a min of £10k. Too much for my liking but its a great return considering they have enough cash in the bank to pay off these bonds and then some.


I wouldn't buy any shares in retailers unless they are something special, only retailer I own are Tesco. Businesses that rely on being the cheapest usually don't last too long unless they have a strategic advantage which allows them to be the cheapest e.g. Amazon.

michaels

I wonder if they were doing much worse than projections or if it more about best buy inc making a strategic decision that returns on retail in Europe were never going to be stellar and they were better off conserving their capital for their core business - after all CPW would never have the clout to go for it alone in that format.

Really2

michaels wrote: »

I wonder if they were doing much worse than projections or if it more about best buy inc making a strategic decision that returns on retail in Europe were never going to be stellar and they were better off conserving their capital for their core business - after all CPW would never have the clout to go for it alone in that format.

Well I think they are looking at £70M loss this year.

They planed to open 200 stores by 2013 across europe.

I presume it is much worse than projections as they have not esculated openings.