Saturday 7 December 2019

Rise in sales at Carphone Warehouse offset by drop in profit margins

CARPHONE Warehouse, Europe's biggest independent mobile phone retailer, beat sales growth forecasts at its main CPW Europe business, with strong demand for smartphones and tablets in Britain more than offsetting weakness in France.

But despite the strong showing the firm said today it would not be changing earnings guidance for the 2012-13 year as it had cut prices and offered deals to drive revenue.

Chief Executive Roger Taylor said CPW Europe's profit margins would be down about 2 percentage points over the full-year, mirroring the first-half fall.

Sales at CPW Europe stores open over a year rose 7.8pc in the three months to December 31, Carphone's fiscal third quarter.

That compared with analysts' consensus forecast for a like-for-like rise of 4pc, according to a company poll, and a 5pc rise in the second quarter.

Shares in Carphone, up 35pc over the last three months, were up 0.5pc at 220.5 pence at 0840 GMT, valuing the business at £1.04bn (€1.23bn).

UK like-for-like revenue was up 16pc but flat in mainland Europe, with France "particularly challenging".

Many European retailers are suffering as rising prices, meagre wages growth, government austerity measures and worries about the euro zone debt crisis hurt consumers.

UK growth was driven by the postpay segment with the prepay market remaining weak.

Taylor said top sellers in the high end smartphone category were Apple's iPhone 5 and Samsung's Galaxy S3. He said the firm also sold "hundreds of thousands" of tablets, taking about 8pc of the tablet market in the UK.

Last week Dixons Retail and Home Retail's Argos called out strong sales of tablets at Christmas.

Non-cellular revenue represented 9pc of CPW Europe's revenue in the third quarter. The firm has a medium-term aspiration to get that figure to 15pc.

Carphone's Virgin Mobile France (VMF) joint venture posted revenue growth of 9.9pc on a constant currency basis.

Carphone reiterated EPS guidance for the 2012-13 year at 11.5-13.0 pence, with a narrowed range for headline earnings before interest and tax (EBIT) of £135-145m for CPW Europe.

Overall third quarter revenue rose 14.5pc to £1.09bn.

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