Electricals retailer Best Buy is on the verge of stopping further European expansion due to weak consumer demand, a report from The Sunday Times argued yesterday.
An additional three stores are expected to be opened in the UK by the firm before the end of the year but in order to cut expected losses and boost its share pricing Best Buy is likely to shelve any further expansion.
The US-based retailer teamed up with Carphone Warehouse in a 50-50 partnership so that the former could launch its business in Europe and the latter could run concessions across the Atlantic.
It is just over a year since the Best Buy Europe’s first ‘Big Box’ outlet was opened in Thurrock, Essex, 12 months behind schedule, and the initial target of 80 stores by 2013 is now almost certain to be missed.
Speaking last month Managing Director of Best Buy in the UK Steve Jensen admitted that the last few years had proven “a challenging environment for retailers” but argued that the company “remains confident that our entry into the UK market has delivered and will continue to deliver”.
Carphone Warehouse is due to announce annual results and an update to its strategy tomorrow, although it is not clear if any final decision on store openings will be revealed or not.
The Sunday Times stated that a curtailing of expansion would be good news for investors with analysts believing that by opening no new stores the company could cut its division loss from £40 million to £20 million this year.