Troubled electronics retailer Best Buy has decided to pull the plug on Europe. After only five years in Europe, the company will sell its stake in its joint venture with Carphone Warehouse for close to $775 million in stock and cash.
Best Buy, which has had to battle its loss of sales to retailers online like Amazon, announced the move would help to simplify its business moving forward and improve the return on capital for the group, strengthening the company balance sheet.
Best Buy said it would report the results from the joint venture in its discontinued operations and take a $200 million dollar charge for the first quarter. The buyout deal is expected to be completed before the month of June is complete.
The joint venture in Europe operates over 2,400 stores across eight countries. It was projected to have sales of $5.5 billion during the current fiscal year. However, its contributions to the earnings of Best Buy were negligible.
Best Buy said that each one of its international markets is different therefore the sale of its operations in Europe should not be a reflection of any action of a similar nature, taking place in the company’s other businesses that are international.
Carphone Warehouse is the leading seller of Europe’s mobile phones and said Best Buy’s decision to end its joint venture came after each of the companies started to focus more on the business conducted in their own areas.
Best Buy closed some of its stores during 2012 and in early April announced it was teaming with Samsung to open Samsung boutique stores inside some of its locations in the U.S.
Get Analysts' Upgrades and Downgrades Daily - Enter your email address below to receive a concise daily summary of analysts' upgrades, downgrades and new coverage with MarketBeat.com's FREE daily email newsletter.