Big Box on hold as Carphone mulls plans

CARPHONE Warehouse yesterday delayed a decision on the next steps for its loss-making consumer electronics megastores until the autumn, as it begins to question the wisdom of expanding while consumer demand slides.

Best Buy UK, which operates ten Big Box-branded stores, reported an underlying loss of 62 million in the year to 31 March, compared with 21m during the previous 12 months. The business, which launched its first store last year in a joint venture with US retailer Best Buy, has invested heavily in marketing and promotional activity in a bid to get the brand off the ground.

But Carphone's core business, including its European and US mobile phone retail chains, has continued to trade well and it reported a 67 per cent increase in underlying profits to 63.3m, on the back of revenues edging up from 3.53 billion to 3.57bn.

The group recommended a maiden dividend of 5p.

Carphone originally intended to open up to 200 Big Box stores in Europe by 2013, but this goal was reduced to 100. There is currently one store in the pipeline.

The electronics market has been hit by the spending squeeze, with other retailers in the sector struggling, including Dixons Retail, Comet and Argos.

The possibility of closing the Best Buy UK business has been flagged by some analysts but others say Carphone is more likely to put the expansion on hold.

It has been calculated that the firm could cut up to 20m from the division's loss this year if it doesn't open any more stores.

However, some commentators have suggested Carphone Warehouse could be waiting to see what rival Kesa Electricals does with its Comet stores - hinting at a possible acquisition.

Best Buy US invested 1.1 billion in Carphone during 2008 as the first step to a European rollout.