U.S. electricals retailer Best Buy Co. Inc. will pay $1.3-billion (U.S.) to buy its British partner out of a fast-growing U.S. mobile phone venture, while abandoning 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 in order 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 smart phones like Apple’s iPhone.
The U.S. retailer bought 50 per cent of Carphone’s retail operations in 2008 for about $2.1-billion to tap the British firm’s expertise in mobile phones and to act as a springboard for expansion across Europe.
While the U.S. mobile phone business has exceeded expectations, the plans for a chain of European megastores have been hit by weak consumer spending, low brand recognition and competition from incumbent players such as Dixons.
Best Buy and Carphone said they would close their 11 Best Buy-branded stores in Britain, which employ around 1,000 staff.