Business

Dixons Carphone in deal with Sprint to open US stores

A pedestrian walks by a Sprint store

Dixons Carphone has signed a deal with US telecoms firm Sprint that could eventually see it open 500 stores in the US.

It said it had agreed to open and manage 20 Sprint-branded US stores as part of a pilot programme.

If that proves successful the two firms will move to a second phase that could see the opening of up to 500 US stores.

During the second phase Dixons Carphone will invest up to $32m (£20m) for a 50% stake in the joint venture.

The deal is the first major expansion for Dixons Carphone since the merger of Carphone Warehouse and Dixons last year.

Sprint is the third largest wireless broadband provider in the US and also owns Boost mobile and Virgin mobile phone networks.

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 sent shares in Dixons Carphone up 1.5% to 465.10p.

US experience

Retail analyst Nick Bubb pointed out that this was not the first North American adventure for either Dixons or Carphone Warehouse, prior to their merger last year.

Dixons bought US electrical store chain Silo for £210m in 1987 but it was not a success. By 1992, Silo was losing £22.4m a year, and Dixons eventually sold Silo to Detroit firm Fretter for $45m (£29m) in 1993.

Mr Bubb said the experience of Silo was still "etched on the corporate psyche" of Dixons, which possibly helped explain why it was taking a fairly cautious approach to re-entering the US market.

Carphone Warehouse had a successful tie-up with Best Buy in the US through the Best Buy Mobile joint venture. That ended in 2012 when Best Buy bought out Carphone in 2012 for $1.3bn.

However, a joint venture between the two in the UK and Europe was not so successful, and all 11 UK Best Buy stores opened under the tie-up were closed.

More on this story