Around 1,100 Best Buy employees stand to be affected by the shuttering of the technology retailer's 11 UK megastores.
The move, which will see the large stores close at the end of the year, was announced by Best Buy on Monday. The stores were part of Best Buy Europe, a joint venture between Best Buy and Carphone Warehouse.
Best Buy plans to close its 11 megastores across the UK, as it focuses on smaller shops. Photo credit: Rich Trenholm/CNET UK
"We hope to be able to redeploy the majority of the [1,100] employees throughout the business," a Carphone Warehouse spokeswoman told ZDNet UK. "They'll go into a [three-month] consultation period now."
The stores, which opened in April 2010, are typically located on the outskirts of towns and were modelled on Best Buy's large shops in the US, which sell electronic equipment. The shops faced "challenging economic conditions," and Best Buy Europe decided to shut them after studying the "profit expectations of these stores," it said in a statement.
Instead of focusing on large stores, Best Buy Europe plans to concentrate on expanding and refurbishing the 2,500 small shops it shares with Carphone Warehouse across Europe. It will launch 'Wireless World' shops, which sell a wider range of technical items than the current typical roster of phones. Some of these will be rebranded existing stores, while others will be new.
Affected Best Buy employees are most likely to find new positions in Wireless World shops, the Carphone Warehouse spokeswoman confirmed. "They've had extensive training for those jobs," she said.
At the moment, Carphone Warehouse has 805 stores in the UK, with 141 fitting into the Wireless World format. By April 2012, the company plans to have between 350 and 400 Wireless World stores, according to its spokeswoman.
Carphone Warehouse tied up with Best Buy in 2008, when it sold 50 percent of its retail business to Best Buy to fund its broadband business.
Due "primarily" to closing the large stores, Best Buy will take a charge of around $150m (£93m) for pre-tax restructuring in its financial results for the second half of 2012, Best Buy said.
Both partners have the option to take control of the European business in 2015. In March that year, either will be able to buy out the other's portion of the Best Buy Europe business.
At the same time, Best Buy announced it will purchase Carphone Warehouse's contractual interest in the Best Buy Mobile stores in the US, avoiding a 50 percent profit split of Best Buy Mobile profits with Carphone Warehouse.
Best Buy will continue to do some business with Carphone Warehouse by providing management consulting services for Best Buy Mobile in the US and Canada. It expects to pay around £5m per year to Carphone Warehouse for these services.