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UK's Dixons Carphone enters USA with Sprint
UK retailer Dixons Carphone has struck a deal with Sprint to expand into the USA and will open and manage 20 Sprint-branded stores as part of a pilot programme that could see up to 500 US stores opened. If the pilot is successful, Dixons Carphone will invest up to $32m (£20m) for a 50% stake in the joint venture during the second stage of the programme.
The deal is the first major expansion programme since Dixons and Carphone Warehouse merged to form Europe’s largest retailer in Dixons Carphone last year. Sprint is the third largest wireless provider in the USA and the partnership is expected to see Dixons Carphone expand heavily into the USA for the first time in several years.
Andrew Harrison, Dixons Carphone deputy chief executive, said:
“This is a very exciting venture for us, and is a significant step in growing our business in the US.We bring specialist knowledge and skills to this partnership and will be looking to deliver innovation and outstanding customer service under the Sprint brand.”
News of the deal saw Dixons Carphone shares increase 1.5% to 465.10p at close of play on Friday but the move into the USA does come with historical risks the company needs to be wary of. Both companies have previously attempted to expand into the USA and while Carphone Warehouse had some success, Dixon’s last efforts failed spectacularly.
[related_videos title=”Sprint Phones in Video:” align=”left” type=”custom” videos=”527524,231784,231406,520350″] Dixons bought US electrical store chain Silo for £210 in 1987 but within a few years, it was losing £22.4m per year and was eventually sold to Detroit-based Fretter for $45m (£29m) in 1993. In comparison, Carphone Warehouse had a successful partnership with Best Buy through Best Buy Mobile, which ended in 2012 when the latter bought out Carphone’s stake for $1.3 billion.
While Best Buy Mobile was a success, the joint venture between the two in Europe failed miserably, with all 11 Best Buy stores in the UK shutting down once it became apparent that the big store format just wasn’t going to work. With Dixons Carphone now the largest retailer in Europe, it’s hoped that the company’s size and scope will allow its latest attempts to crack the US market to be a success but this remains to be seen.