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Best Buy to exit Europe with sale of Carphone Warehouse stake Tuesday, 30th April 2013
Photo credit: My Retail Media
US retailer Best Buy Co Inc has sold its 50 per cent stake in a joint venture with Europe’s biggest independent mobile phone retailer Carphone Warehouse Group over to its European partner.
The sale, thought to amount to around GBP 500 million, (USD 775 million) is the latest effort by Best Buy is scale back its overseas operations in order to focus on its troubled US business. The retailer has come under fierce competition in recent years from the growth of online retailers such as Amazon, as well as a number of change-overs at the head of its business, including the departure of its founder and chairman Richard Schulze last year.
In a statement on Tuesday, Best Buy chief executive Hubert Joly said by selling its share in its European venture, it is hoped Best Buy will be able to strengthen its balance sheet and improve its return on invested capital.
Best Buy originally bought 50 per cent of Carphone’s retail operations for around USD 2.1 billion in 2008 as it looked to expand into Europe. However weak consumer spending and low brand recognition meant Best Buy’s plans for a chain of European big-box stores failed to gain traction on the Continent.
Carphone Warehouse beats forecasts as Q3 sales rise 7.8% Thursday, 24th January 2013
Carphone Warehouse's first store in Marylebone. Photo credit: Carphone Warehouse
Third quarter sales at Carphone Warehouse stores open over a year rose 7.8 per cent, as strong trading in the UK managed to offset more challenging conditions in France.
The results came in comfortably ahead of analysts’ consensus forecast for a like-for-like rise of 4 per cent, according to a company poll, and a 5 per cent gain in the previous quarter.
Europe’s biggest independent mobile phone retailer on Thursday reported UK like-for-like revenue rose 16 per cent in the three months to 31 December. Revenue came in flat for mainland Europe, as trading on the continent remained tough, with Carphone Warehouse noting France as “particularly challenging” during the period.
The company reiterated EPS guidance for the 2012-2013 year at 11.5 pence to 13.0 pence, narrowing its range for headline EBIT of £135 million to £145 million for Carphone Warehouse Europe.
Carphone Warehouse to consider Best Buy buy-out? Thursday, 15th November 2012
Photo credit: Carphone Warehouse
After revealing a 1.6 per cent rise in like-for-like first half sales at its core European unit on Wednesday, it’s now thought the group could buy US retailer Best Buy out of their joint venture in Europe, in a deal which would put it in line for a return of up to £550 million.
“If [the joint venture] was sensible value, I would be very surprised if the board and shareholders didn’t want to take it.” Carphone Warehouse chief executive Roger Taylor said, adding: “It is not like buying something where there in an inherent risk. It’s already our business.”
According to the Telegraph, Carphone’s potential return would come as its partner Best Buy faces a bid in the US, which, if accepted, would put into a motion a clause giving the UK company the option to buy out the 50 per cent of the European joint venture it does not own at a 10 per cent discount to market value.
Best Buy founder Richard Schulze has been given to the end of the month to make a bid on the US company, which Carphone will likely be keeping a close eye on before it can make a formal approach for the European business.
Carphone Warehouse reports 1.6% rise in sales Wednesday, 14th November 2012
Photo credit: Carphone Warehouse
Europe’s biggest independent mobile phone retailer on Wednesday reported a 1.6 per cent rise in underlying sales at its core European unit, as the company braced itself for a decline in the first six months of the year.
Strong demand in the UK for promotions in postpay products and smartphones were said to drive a rise in sales at CPW Europe stores open for more than a year, while the company said it has now forecast a 2 per cent decline overall in the six months to 30 September.
Underlying sales in the first quarter rose 5 per cent, after declining 2 per cent in the first three months of the year.
"We have substantially increased our market share of UK postpay volumes and, while the prepay market remains weak, we hope for an improvement in the second half as the product pipeline continues to broaden," chief executive Roger Taylor said in a statement on Wednesday.
Carphone Warehouse reiterated its forecast for full year earnings before interest and tax for CPW Europe of £130 million to £150 million, flat earnings at Virgin Mobile France (VMF) and group underluing earnings per share of between £11.5 pence and 13 pence.
Group pretax profit grew 30 per cent to £8.6 million ahead of a company compiled consensus forecast of £4.9 million.
Jack Wills for sale? Retailer’s new appointment sets the rumour mill in a spin Wednesday, 29th August 2012
Photo credit: Jack Wills Spring/ Summer 2011 campaign
Self-dubbed ‘university outfitters’ Jack Wills has left speculation rife over a possible sale or floatation after the clothing retailer announced a new chief operating officer.
Former Vodafone and Carphone Warehouse executive Wendy Becker will join the apparel group as chief operating officer, in a move many see to suggest the group is preparing to sell a stake or preparing to float the business next year.
Becker, who previously worked as group marketing head at Vodafone and sits on the board at Ocado, will join Jack Wills next month, reporting directly to chief executive and co-founder Peter Williams.
Having set up the clothing label back in 1999, Williams and his partner Robert Shaw currently own over 70 per cent of the group.
Best Buy buyout could spell end to Carphone Warehouse JV Thursday, 9th August 2012
Photo credit: My Retail Media
A contract clause in Best Buy’s joint venture with Carphone Warehouse could give the UK retailer a £660 million reason to exit the deal.
Terms of the deal between the two companies brought to light by the Guardian on Thursday show that if Best Buy’s buyout goes ahead, Carphone Warehouse founder Charles Dunstone could buy back the 50 per cent stake in the joint venture for “fair market value” once there is a change in ownership at Best Buy.
According to a report by the Guardian, Exane BNP Paribas bank has put that figure at £600 million, with today’s exchange rates, the amount would be £500 million less than Best Buy originally paid. Taking into account stipulated discounts, this would put the cost of regaining full control for Dunstone at just £540 million.
Although neither Best Buy or Carphone Warehouse would comment on the speculation, the Guardian pointed out that the US retailer might be keen exit its Euoropean joint venture with the amount of cash at stake.
Carphone Warehouse boss to collect £34m despite Best Buy UK shambles Friday, 29th June 2012
Image courtesy of Carphone Warehouse
Roger Taylor, Carphone Warehouse Group chief executive, is set to collect £34 million in cash and shares this year despite the failure of the Best Buy UK chain, the creation of which he spearheaded.
Carphone Warehouse had to shut 11 stores in the UK with 1,100 jobs lost, as well as simultaneously pulling out of its Best Buy Mobile venture in the US.
Taylor was awarded 8.4 million shares from the Best Buy Europe scheme, scoring £14 million in cash from a special dividend paid to all shareholders in January, plus a shareholding which is worth £12 million. However, Taylor waived his £220,000 annual bonus, choosing to give the money directly to Cancer Research UK.
Carphone Warehouse eyes international expansion Thursday, 10th May 2012
Photo credit: Carphone Warehouse press office
Carphone Warehouse is reportedly seeking international partners to aid its expansion outside Britain and France where economic growth is strained, at best.
The telecommunications retailer has said that weakness in the pre-pay mobile phone market had hit fourth-quarter sales, causing like-for-like revenue to dip 5.5 per cent.
The firm has stressed it will still meet forecasts for 2011/12 earnings.
Carphone Warehouse is now looking to expand in China, South America and Eastern Europe.
According to Reuters, the company is now planning to open 14 Best Buy Mobile SWAS stores in Best Buy’s China branded stores.
Carphone Warehouse said in November that full year operating profit would be at the lower end of a £135 million to £150 million forecast – flat compared to the previous year.
On Wednesday the firm said sales at Carphone Warehouse stores in Europe fell 5.5 per cent in the three months to the end of March.
"We estimate that the overall prepay market in Q4 was down 30-40 per cent in the UK, similar to Q3, driven by a lack of attractively-priced smart phone products in this segment, and a weak consumer environment," the company said in a statement.
Best Buy big-box stores to close on 15 January Tuesday, 3rd January 2012
Best Buy’s 11 UK big-box stores and website will close down on 15 January, signaling the end of its attempt to revolutionize the electricals market.
This closure comes a year after the first of the UK-based Best Buy stores opened with the intention of grappling with Dixons and PC World.
The venture was capsized by punishing trading conditions, lack of scale and stiffer competition than initially expected following Dixons’ implementation of a renewal and transformation plan under boss John Browett.
Many of the Best Buy staff are expected to be sent to work for other Carphone Warehouse operations.
John Lewis pledges to replace 1,000 jobs threatened by Best Buy collapse Tuesday, 8th November 2011
Managing director of the department store Andy Street has pledged to create enough jobs next year to replace the 1,000 under threat from the collapse of Best Buy UK.
Street has suggested Best Buy underestimated the competition it faced when launching in the UK back in 2009, and is determined to replace the jobs put in jeopardy by the closure of eleven Best Buy stores in Britain.
The stores were originally intended to shake up electronics retailing, claiming cheaper prices and better customer service.
"I don't want to get into criticism but the competitors must have done a better job than they [Best Buy] expected.
“The US model is keen prices combined with high service. The truth of the matter is that prices were already extremely keen and high service is being provided by us … Put that together and there was not a gap in the market."
John Lewis is said to have created 1,000 jobs this year with new store openings including Westfield Stratford City. The retailer plans to add as many jobs next year as it prepares to open four “At Home” electrical, home and technology outlets in Newbury, Chichester, Ashford and one more additional location.