Best Buy (NYSE:BBY) announced that it plans to sell off its retail business in China and narrow its focus on North America.
The retailer has entered into a definitive agreement for sale of its Five Star business to the Jiayuan Group, a China-based real estate firm.
"Over the last two years we have worked to improve our business in China and are proud of the progress we have made there," said Hubert Joly, president and CEO of Best Buy. "We were recently approached by Jiayuan Group, a respected Chinese investment group, which offered to acquire the business with plans to further expand it. The Jiayuan Group has agreed to work with Five Star Chief Operating Officer Yiqing Pan, who will become CEO of Five Star. Mr. Pan has been with the business for many years and has a deep respect for Five Star employees, as well as a vested interest in continuing to work with them to build a stronger presence in China."
Four years ago, Best Buy sold off all stores in China that it ran under its own brand and now it will sell 184 Five Star stores, reported the Associated Press.
The company will continue to run its private label business in China, which makes products for brands such as Dynex, Insignia and Rocketfish. Joly also noted that the sale of Five Star does not suggest any similar actions will be taken in regards to Best Buy in Canada or Mexico.
The deal is expected to close in the first quarter of 2016.
Best Buy is starting to show signs of turnaround after a slow-down in the market and last year's report of bleak holiday sales. Earlier this year, the company returned to making a profit and took steps to reduce costs such as cutting about 2,000 store managers in the United States.
-See this Best Buy press release
-See this Associated Press article
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