Jobs Threat As Best Buy Closes Down UK Shops

Carphone Warehouse has confirmed it is to close its 11 Best Buy stores in the UK, putting 1,100 jobs in jeopardy.

The news follows a decision by the group's founder, Charles Dunstone, to sell his stake in a US mobile phone joint venture with Best Buy, as first reported by Sky's City editor Mark Kleinman .

The US electrical chain will pay £813m upfront, which is expected to be returned to shareholders, as well as an additional £25m in deferred consideration.

Despite saying it had "exceptional customer satisfaction scores" the company's European arm has not performed well financially.

Best Buy Europe posted operating losses of £47m in the six months to September 30, a figure it expects to grow by up to £30m by the end of the calendar year.

Andrew Harrison, the company's regional head, said the move out of the UK was designed to concentrate the group's investment and strategy into its Carphone Warehouse stores "as they offer a higher and proven rate of return".

"The technology world has changed substantially since 2008 and we are confident we will best serve our customers by investing in a single brand and format rather than two," he added.

But the head of Dixons Retail, a rival electronics chain, had a different view.

John Browett told Sky News: "In the end, it was the customer offer they got wrong.

"They had ambitious targets, and in order to do that you'd have to have an amazing experience for customers, and essentially when we did the research, customers preferred our stores."

Aiming to complete the store closures in the next eight weeks, Carphone Warehouse said it was confident it could "redeploy the large majority of those affected within other areas of its business".

"Our immediate focus is on ensuring that they are offered new opportunities within Carphone Warehouse and Geek Squad, where they will help us deliver a best-in-class customer experience," the company said in a statement.

An established player in the North American electronics market, Best Buy bought half of Carphone Warehouse's retail operations in 2008 as a springboard into Europe.

However it has now abandoned plans for a chain of megastores in the continent citing weak consumer spending, low brand recognition and high competition from rivals such as Dixons.

The 11 Best Buy UK stores are located in Aintree, Bristol, Croydon, Derby, Enfield, Hayes, Southampton, Merry Hill, Nottingham, Rotherham and Thurrock.