April 26, 2010 10:24 pm

Best Buy Europe opens first British store

Best Buy Europe insisted it was in the UK electricals market for the long haul, as it prepared to throw down the gauntlet to rivals by opening its first British megastore.

The joint venture between Carphone Warehouse and the US’s Best Buy will open its first megastore in West Thurrock in south-east England on Friday, almost a year later than planned. It aims to have up to 10 stores by March next year.

“We are in a marathon here, not a sprint,” said Scott Wheway, chief executive of Best Buy Europe. “In that marathon . . . there will be some good times and some less good times. We are looking at it through that marathon lens, rather than through the sprint of the next nine months lens. We are here for the long term.”

Carphone Warehouse said it would spend £35m-£40m ($54m-$62m) opening “big box” stores in the year to March 2011, and would incur £40m-£45m of operating losses from the outlets. In the year to March 2010, the UK big box stores made an operating loss of £21m.

Roger Taylor, chief executive of the newly demerged Carphone Warehouse, said this reflected developing the infrastructure for the big box stores, funded from better than expected cash flow.

Charles Dunstone, chairman, said 100 megastores across Europe by 2014 remained an “aspiration”.

The Thurrock store will use the formula that has proved successful in the US, including employing highly trained sales staff known as “blue shirts” as they wear blue polo shirts, with management trained for nine weeks in the US. It will emphasise service – including helping customers to connect and use their high tech purchases – and selling more complex goods.

Rival DSG International has opened a larger megastore on the same retail park, with the two just visible from each other, fuelling expectations of a battle between the companies.

“We are not trying to get into any kind of personal or corporate battle with anyone else in the marketplace,” insisted Mr Dunstone. “We are just going to open our stores. We are going to do the very best we can for customers with the best people and we are going to let the customers be the judge.”

The comments came as Carphone Warehouse lifted its full-year profit guidance helped by a better than expected performance by Best Buy’s US mobile phone retail business, in which Best Buy Europe has a profit share. It expects underlying earnings per share of 8-8.4p, compared with 4p in the year earlier.

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