Carphone Warehouse has posted an upbeat estimate of the profit it expects from its Best Buy joint venture. The update comes days before the first UK Best Buy megastore opens.
The company is predicting, in a fourth quarter trading update
that its share of Best Buy Europe profit will come in at £47m in the three months to March 2010, up from a recent forecast of between £40m and £45m. In the year to March 2011, it expects that figure to rise to between £47m and £50m, after tax.
Carphone Warehouse is operating a European joint venture bringing leading US multichannel retailer Best Buy to Europe in partnership with Best Buy. At the same time it is taking its Carphone Warehouse telecoms model to the US through another joint venture, Best Buy Mobile.
In the shorter term, however, the UK part of the multichannel joint venture Best Buy UK arm, or Big Box, is scheduled to make a loss of £21m in 2010, rising from £7m in 2009, as a chain of new stores is rolled out across the country. The first opens in Thurrock, Essex, on Friday.
Elsewhere in the trading update, the retailer reported a 3% rise in its Carphone Warehouse Europe turnover in the last quarter of its 2010 financial year, while mobile connections were down by 2.9%. That was made up for elsewhere in its business as Best Buy Mobile in the US showing a 34.2% rise in connections to 1.43m over the same period. The profit share from Best Buy Mobile US is put at £46m for the last quarter.
Charles Dunstone, chairman, said: “Best Buy Mobile US is outperforming even our expectations. Carphone Warehouse Europe continues to trade strongly.”