Best Buy , the world's No.1 electricals retailer, will do whatever it takes to succeed in the UK, joint venture partner Carphone Warehouse said as it raised profit expectations for the third time in six months.
Carphone, Europe's biggest independent mobile phone retailer, said on Monday it was benefiting from surging demand for smartphones like Apple's iPhone and strong sales at the venture's Best Buy Mobile business in the United States.
The venture, called Best Buy Europe, is unveiling the first of a long-awaited chain of megastores in Britain on Monday that will take on market leader DSG International , which owns the Currys and PC World chains.
The launch, originally planned for last summer, was delayed by the recession, giving time for DSG to develop its own chain of megastores, often close to the sites acquired by Best Buy Europe, and raising speculation of a price war.
We're here to make it work. We will make it work, whatever that takes, Carphone Chief Executive Roger Taylor told Reuters in a telephone interview, when asked if Best Buy had the stomach for a fight.
Carphone, which demerged telecoms arm TalkTalk last month, said underlying earnings per share for the year ended March would be 8.0-8.4 pence, up from 4 pence the year before.
Like-for-like revenues at the group's European business were up 3 percent at constant currencies in the final quarter, boosted by demand for a range of smartphones as firms like Research In Motion , Samsung <005930.KS> and Nokia seek to challenge the iPhone.
Taylor said almost 50 percent of all handsets sold by Carphone in the UK were smartphones.
Carphone also said connections at the venture's Best Buy Mobile business in the U.S. leapt 34 percent in the fourth quarter and that this business was likely to power growth in 2010-11, despite a difficult economic backdrop.
By 4:30 a.m. ET, Carphone shares were up 3.59 percent at 201.75 pence.
The macro environment will undoubtedly present challenges but we are well positioned in each of our businesses and we are targeting 40 to 45 percent EPS (earnings per share) growth for our 2011 financial year, said Chairman Charles Dunstone.
Credit Suisse analysts said the guidance, at its midpoint, implied a 6 percent increase to their 2010-11 EPS forecast of 11.1 pence.
However, they added the good news was offset somewhat by guidance that operating losses for the new big box megastores venture would be 40 million pounds ($61.87 million) to 45 million pounds, higher than their assumption of 38 million pounds.
Taylor said the venture would open eight to nine megastores this year, and that plans for next year would depend on their performance, as well as the success of an online business that will be launched in the autumn.
(Editing by Mike Nesbit and Sharon Lindores)