American electronics retailer Best Buy (BBY) plans to cut the number of its new store openings in China this year following an announcement of a 6.8% decline in its profit in the first quarter of the year.
Best Buy previously planned to add 20-25 Five Star stores and five to eight Best Buy stores in China in 2008, but Hexun.com now says Best Buy has decreased the number to 8-16 and 1-3, respectively. Best Buy says that the time to wait for the government's approval of its new store opening has gone beyond of its expectations.
Best Buy's retailing business commenced in China in 2005. In May 2006, the company announced plans to invest USD180 million to take over stakes in Five Star, a local home appliance retailer. However, compared with Chinese competitors like Gome and Suning, Best Buy moves slowly in opening new stores. At present, the company's opening of its second store in Shanghai has to be delayed due to a failure in obtaining an approval from the government. And a few months ago, Best Buy closed its procurement and sourcing office in Beijing.