Withdrawal from joint venture with Carphone Warehouse turns profit from international operations into £21 million loss
The decision by Carphone Warehouse and Best Buy to pull the plug on their UK joint venture has contributed to the US retailer taking a £97 million charge in its Q3 results.
Best Buy incurred the £97 million in charges as a result of restructuring costs, including redundancies, from the closure of the 11 “big box” stores across the UK, as well as charges incurred on its US entertainment business.
The impact of the UK closures turned a £21 million operating profit from the firm’s international operations into a £19 million loss.
The impact on the Best Buy’s international business helped drag Q3 net earnings at the firm down by 26 per cent to £111 million in Q3 from £140 million in the same period a year ago.
Revenues across Best Buy’s global business rose by 1.7 per cent to £7.8 billion during the quarter. However, revenues excluding the US fell 1.7 per cent to £2.1 billion.
Best Buy CEO Brian J. Dunn said: “We took actions to provide value to customers and drive our business in this competitive consumer environment. We are pleased to report positive traffic, comparable store sales growth and continued progress on our key strategic focus areas, highlighted by strong performance online.”
In November Carphone and Best Buy announced they were closing the 11 stores in the UK by the end of the year, just three years after joining forces to target the consumer electronics market, and little more than a year and a half since the first big box store opened.
Carphone Warehouse said at the time that it would instead concentrate on its Wireless World store format.