By Mark Potter

Best Buy said on Tuesday it aimed to double revenues to around $80 billion by 2013, led by a drive into the $175 billion a year European electrical goods market currently led by Germany's MediaMarkt and Britain's DSG International and Kesa Electricals.

Robert Willett, the chief executive of Best Buy International, said the venture with Carphone, called Best Buy Europe, would take into account trading conditions, but was determined to execute its plan, initially focused on the UK.

"Clearly, the plan will be tailored in terms of rollout etc to the consumer's ability to take advantage of it ... This isn't a race for us. It's about doing it thoroughly, properly," he told analysts on a conference call from Chicago.

At 1640 GMT shares in Best Buy, which currently runs about 3,800 stores worldwide, were up 2.3 percent at $27.75.

Carphone Warehouse shares, however, fell as much as 6.5 percent to 136.75 pence as analysts said the cost of the new stores and tougher trading conditions for its existing mobile phone and telecoms business would hit profits this year.

Best Buy Europe said it planned to double sales and earnings from Carphone's existing retail business by March 2013.

That would equate to earnings before interest and tax of about 350 million pounds ($614 million) and revenues of over 6 billion -- bolder targets than some analysts had expected.

"The guidance is ambitious, in our view, and ahead of forecasts," JP Morgan analysts said in a research note.

However, they said higher-than-expected start-up costs of up to 20 million pounds this financial year and up to 30 million next year, as well as an uncertain economic outlook, could knock about 15 percent off profit forecasts for the British group.

Credit Suisse analysts said the consensus profit forecast for Carphone was likely to fall to 185-190 million pounds ($325-$333 million) for the year to March 2009 from 215 million.

"The immediate consumer outlook remains very uncertain," Carphone, Europe's biggest independent mobile phone retailer, said in a trading update.

But Chief Financial Officer Roger Taylor, who is also the head of Best Buy Europe, told Reuters this could work to the venture's advantage, by making real estate cheaper and weakening rivals' ability to respond.

"I don't think there could be a better time to do it," he said in a telephone interview.UK FIRST

Taylor said the venture planned to open around 100 large stores of at least 30,000 square feet, with an initial cluster of three to five opening in the UK next summer.

The stores will focus on consumers' communications and entertainment needs, spanning mobile, broadband and computers, as well as audio-visual equipment and technical support. They may also sell fridges and washing machines, Taylor said.

The venture will probably expand its online offering in mainland Europe after one to two years, and will open stores there after that, he said.

The new stores will add to the pressure on DSG, which runs PC World and Currys shops in Britain, and Kesa, which runs Comet in Britain and Darty in France, at a time when consumers are already cutting back on discretionary spending amid higher food and fuel costs and growing economic uncertainty.

DSG shares closed down 8.4 percent at 35.5 pence, underperforming a 1.5 percent rise on the DJ Stoxx European retail index. Carphone closed down 4.4 percent at 139.75 pence, while Kesa was up 0.2 percent at 103.5 pence.

Taylor said Carphone's existing business was holding up comparatively well in the consumer downturn.

Total mobile connections rose 9 percent to 3.1 million in the 13 weeks to September 27, beating analysts' average forecast of 3.05 million in a company poll.

Subscription connections were up 21 percent at 1.3 million, driven by strong sales of mobile broadband devices such as iPhones and Blackberries, as well as its free laptop offer.

However, profit margins were lower.

The net number of new broadband customers, at 35,000, was also below analysts' average forecast of 46,000, though Carphone kept its recently reduced full-year customer growth forecast of between 200,000 and 250,000.

Carphone Chief Executive Charles Dunstone, who founded Carphone in 1989 and owns about 33 percent of the business, told analysts he would consider separating the group's telecoms business from the electrical goods venture in the future.

(Additional reporting by Kate Holton; Editing by Will Waterman and Jon Loades-Carter)