06 Jul 2015
U.S electronics giant, Best Buy Co Inc, announced they will sell their 184 stores in China (named Five Star) to a local Chinese real estate firm. Best Buy’s CEO, Hubert Joly, made a statement saying the closure is made to focus on reviving their position in the North American market. The only remaining asset in China will be their sourcing operations – their private label, everything from tablets to cords, is expected to grow.
Best Buy, along with other U.S retailers, have continually struggled in China due to an overcrowded market, slowing economy and fierce competition (both online and off). In a recent statement Joly said, “the sale of Five Star does not suggest any similar action in Canada or Mexico. Instead, it allows us to focus even more on our North American business”, which now represents about 85% of global sales. Last year Joly also pulled the company out of Europe by selling their 50% stake in Carphone Warehouse Group Plc.
An analyst at Stifel Financial Corp., David Schnick, supports Joly’s decision to exit China, saying “Five Star was both a distraction for management from core North America operations and, at some level, a drag on total company results.” In the most recent financial year, Best Buy’s China operations only produced 4% of the company’s overall sales.
View the original articles here.