Carphone Warehouse today said it was ‘evaluating’ its next step after losses on Best Buy UK, the multichannel consumer electronics business it runs as a joint venture with US firm Best Buy, widened.
Carphone Warehouse’s full-year results, published today, showed that losses before investment income, interest and tax for the Best Buy ‘Big Box’ business grew to £62.2m from £21m at the same time last year following investment in six megastores and the online channel.
The company said that its store openings, of which six came during the financial year to March 31, had been “impressive” in execution and that it had been “delighted with the customer feedback”. However it said it was now “in the process of evaluating the next steps in our multi-format/multichannel consumer electronics strategy.”
It added: “With only six stores at the year-end, the business still has a disproportionately high central cost base, and has made a substantial investment during the year in marketing and promotional activity, to develop awareness of its brand and retail presence.”
When Best Buy first announced its UK operations it said it expected to create 8,000 jobs over five years. So far it has opened 10 Big Box stores, each employing around 100 people, and also sells online.
On one level Carphone Warehouse said the widening losses from Best Buy were offset by a group-wide 67% rise in earnings before investment income, interest and tax (EBIT) to £63.3m, from £38.0m at the same time last year, thanks to strong performances in other parts of the group. They included Carphone Warehouse Europe, where EBIT grew by 18% to £134.6m, and Best Buy Mobile US, where Best Buy Europe’s share of profits grew by 111% to £97.9m. In all, Best Buy Europe’s EBIT came in at £170.3m on sales of £3.6bn, up 1.2% on the previous year.
However bottom-line group-wide pre-tax profits fell substantially compared to last year. Pre-tax profits came in at £67.2m, down from £218.4m last time.
The Carphone Warehouse’s other key business is a stake in Virgin Mobile France, where the company moved into profit for the first time.
Chief executive Roger Taylor said: “This has been a year of considerable success for the group during which our businesses have made impressive progress.”
