With all the news in recent months about the debt crisis striking closer to home here in the UK, another retail outlet has announced the closure of 11 of its electrical discount locations. Carphone Warehouse that operates under the Best Buy label is now expected to announce that more than 1,000 workers could be losing their jobs by the holidays.
Best Buy outlet stores in the UK had meant to be a place where Carphone could find prominence as an electronics retailer but these plans have been dashed by the announcement of store closures. Recent reports have shown that there have been management problems in the 11 ‘big box’ locations throughout the Midlands and the southeast.
As well, one of the hardest sectors hit during these troubling economic times has been the electronics industry because this is perceived as a luxury expense and not a necessity. In fact, business had been so bad that it is expected Carphone will announce a £35 million 6 month loss at some point this week.
Although the news is bad for Carphone, it is also not good for Best Buy UK as they had invested £1.1 billion in the fledgling Carphone company in 2008 during the rollout in Europe. Based in the United States in Minnesota, there are currently over 1,300 stores around the world and Best Buy wanted to hit the UK with their model known for excellence in expert customer service.
The final news expected to be announced is that Carphone’s co-founder, Charles Dunstone, sold the company’s 50% Carphone’s shares in a joint US mobile phone venture which had been embarked upon with Best Buy. The bottom line of the sale is expected to net nearly £1 billion – maybe not a loss for Carphone but certainly a loss for those 1,000 workers soon to be unemployed.
