United States electronics retailer, Best Buy Company Incorporated is buying its British partner out of a fast-growing US mobile phone joint venture for $1.3bn and scrapping plans for a chain of European megastores.Reuters reported on Monday, that the moves are the latest sign Best Buy is scaling back its overseas ambitions to focus on its main US business, which faces stiff competition from discounters and online retailers.Earlier this year, the US group dropped plans for Best Buy-branded stores in China and Turkey.The decisions also underscore the gloomy outlook for European retailers as consumers there grapple with rising prices, subdued wages growth and government austerity.Best Buy said it would buy out Carphone Warehouse Group Plc from a profit share of their Best Buy Mobile venture in the United States and Canada, which has been benefiting from soaring demand for smartphones like Apples iPhone.For Best Buy to be able to no longer have to share 50 per cent of the profits of a high-margin, fast-growing business with Carphone Warehouse, from my perspective, is a real positive, said BB&T Capital Markets analyst, Mr. Anthony Chukumba.It is not a game-changer. Best Buy still has the same challenges they did 24 hours ago-- fairly weak product cycle particularly in flat-panel TVs, increasing competition from Amazon, probably too much retail square footage.The deal, along with a new venture aimed at replicating Best Buy Mobiles success in emerging markets, helped to move attention away from the closure of the two firms loss-making megastores business in Britain, as well as a larger-than-expected drop in Carphones first-half earnings.At 1350 GMT, Carphone shares were up by one per cent at 348.25 pence, outperforming a 1.1 per cent fall in the STOXX Europe 600 European retail index.Barclays analysts said Carphone was getting a good price, with the $1.3bn deal worth more than the entire equity valuation of the British group when it was demerged from telecoms arm TalkTalk last year.Carphone said it would return proceeds from the deal to investors, giving a big windfall to founder Charles Dunstone.Dunstone, who owns about 29 per cent of Carphone Warehouse according to Reuters data, has been praised by investors for striking his initial deal with Best Buy in 2008, shortly before a plunge in equity market valuations.Best Buy said taking full control of Best Buy Mobile and closing British megastores would add 35-40 cents to fiscal 2013 earnings. The one-off cost of both actions, plus a non-cash impairment to write down goodwill, was $2.6bn, it added.Best Buy bought 50 per cent of Carphones retail operations for about $2.1bn in 2008 to tap the British firms expertise in mobile phones and to act as a springboard for expansion across Europe.While the US mobile phone business has exceeded expectations, the plans for a chain of European megastores have been hit by weak consumer spending, low brand recognition and competition from incumbent players such as Dixons.Best Buy and Carphone said they would close their 11 Best Buy-branded stores in Britain at a cost of between 65 and 75 million pounds, but expected to redeploy most of the 1,000 or so staff.Only three years ago, when the two firms announced plans for the megastores, they promised a chain of up to 100 outlets in Britain that would then sweep across Europe.
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