U.K. venture gives a peek at Best Buy's phone sales

Just as Best Buy Co. Inc. is ready to open its first store in the United Kingdom, its partner in Europe on Monday provided an upbeat outlook for the overseas market in consumer electronics as well as a glimpse into Best Buy's explosive growth in mobile phone sales.

In a fourth-quarter sales and earnings report, London-based Carphone Warehouse reported that sales and activations of mobile phone services at Best Buy Mobile's U.S. stores increased 34.2 percent in the fourth quarter -- "a blowout number," said UBS AG analyst Andrew Hughes, in an e-mail to Bloomberg News.

Carphone Warehouse also raised its profit forecast for the year, based largely on expectations that sales of smart phones in the U.S. and Europe will remain strong.

Richfield-based Best Buy and Carphone Warehouse, Europe's largest mobile phone retailer, formed a joint venture in 2008 known as Best Buy Europe.

Under the agreement, the companies split profits from all Best Buy Mobile stores in the United States as well as from Carphone Warehouse's 2,400 stores in nine European countries.

Best Buy's $2.1 billion investment gave it instant access to the European market with a major player. It also allowed Best Buy to take advantage of Carphone Warehouse's existing relationships with multiple mobile phone service providers, making Best Buy the only U.S. retailer where customers can make side-by-side comparisons of nearly every type of handset and service plan.

The first big-box store with the Best Buy name over the doorway is scheduled to open Friday in Thurrock, Essex, a suburb east of London. The store, which also includes Geek Squad agents, will sell electric cars and bicycles along with laptops, cell phones and other items found in typical U.S. stores.

Three more large-format stores are scheduled to open in the U.K. by year's end, with a goal of opening eight to 10 by March 2011, Carphone Warehouse CEO Roger Taylor told investors. A website is expected to launch this fall.

Taylor said the freestanding stores will incur a larger-than-expected operating loss of $62 million to $70 million, but urged investors to suspend judgment during what he described as trial period for the large-format stores.

"We're saying, 'Be patient with us this year,'" Taylor said. "It's quite different to current consumer electronics outlets and after we've been through this year we can stand up and be clear about our intentions."

Taylor declined to comment on when the unit would be profitable.