US electricals giant Best Buy expects its European venture with Carphone Warehouse – Best Buy Europe – to generate sales of US$3.2 billion (£1.8 billlion) in the second half, it revealed today.
However, the strength of the dollar is likely to dent the business’s performance when incorporated into Best Buy’s financial statements.
Along with second quarter trading figures, Best Buy said: “The operating model for the new venture carries a higher gross profit rate, and a higher SG&A [selling, general and administrative expenses] rate, compared with the company's base business.”
Best Buy said the expected operating income rate for Best Buy Europe for the second half of this fiscal year is approximately 4 per cent.
Best Buy added: “The recent strength of the US dollar is expected to negatively impact the results of Best Buy Europe as incorporated in Best Buy's financials.”
Best Buy Europe’s operating results will not be incorporated until the third quarter.
The retailer reported sales up 12 per cent to US$9.8 billion (£5.5 billion) during the second quarter, when like-for-likes rose 4.2 per cent. Profit fell 19 per cent to US$202 million (£113 million) as a result of costs such as investment in US stores and the roll-out of Best Buy Mobile.