Best Buy Co. arrived in Mexico on Friday with the opening of its second-largest store worldwide.
The event came weeks after Best Buy cut its 2009 revenue outlook, following a sharp drop in global sales.
The retailer now projects between $43.7 billion to $45.5 billion in revenue for fiscal year 2009, down from the $47 billion it projected earlier. It says annual same-store sales could fall up to 8 percent next year.
Best Buy attributed slow international sales to the strong U.S. dollar and weakening local currencies abroad.
Still, the electronics chain is faring better than its major competitor, Circuit City, which declared Chapter 11 bankruptcy on Nov. 10.
“While these are no doubt difficult times, this is also a time for great opportunity,” said Bob Willet, chief executive officer of Best Buy International.
He said he believes Mexico is a safe bet for the future.
Best Buy plans to build more stores in various cities throughout central Mexico, although it did not specify how many or when.
Richard Hastings, a consumer strategist with Global Hunter Securities, said despite slower sales, Best Buy will continue to spread its reach around the world.
“The company’s basic strategy is to expand into places where the middle class is expanding, and in Mexico City and central Mexico, that’s especially the case,” he said.
President Felipe Calderon said the store puts Mexico on the right path to increase foreign investment. He said Best Buy’s initial investment in Mexico will total $45 million, including the costs to build the store and create 450 jobs.
Mexicans’ spending power has been on the rise in recent years as annual per-capita salaries rose from US$4,000 to US$9,000, he said.
Hastings said improved infrastructure as well as job and population growth in central Mexico make the region a good fit for the retail chain.
“Mexico is a complex, but long-term and promising market, and we expect consumerism to grow in Mexico over the next five years,” he said.
The Minneapolis, Minnesota-based Best Buy employs 130,000 people at 3,700 stores _ 1,300 of which are in Canada, Europe, China and Puerto Rico.