Carphone Warehouse reiterates earnings guidance
Carphone Warehouse Group has said that it is confident it will achieve full year headline earnings guidance despite a challenging outlook.
The CPW Europe group performed strongly in the third quarter on postpay sales and is now benefiting from the improved profitability of its new postpay commercial terms. It also achieved 15% growth in its non mobile revenues with the sale of tablets and other devices accelerating.
However, the group estimates that the prepay market in the UK is down 35-40% driven by a reduction in subsidies from the networks in low-end prepay, a lack of smartphone product in the segment, and a weak consumer environment.
As a result, total like-for-like revenue was down 4.7%, with total connections down 16.6%. However, the group said postpay remained its key profit driver and therefore it was confident of achieving full year headline earnings within guidance.
The group confirmed that one of the key opportunities for CPW Europe was to broaden its non mobile product category by moving more deeply into tablets, accessories, applications and content. Non mobile revenue grew by approximately 15% year-on-year in Q3 but still represents less than 10% of total revenue.
The group said it was continuing to develop its multi-channel proposition and its new Wireless World format stores to tap into demand for connected technology and to drive its non mobile revenue growth.
Chief executive Roger Taylor said: "We remain well-placed to benefit from continued consumer enthusiasm for connected technology, and as such we are accelerating the roll-out of our Wireless World stores to meet this demand and deliver a strong service proposition that complements this segment of the consumer electronics market.
"As with all retailers, we face a tough consumer backdrop, but our customers value our proposition and we are capitalising on the strong product cycle in smartphones and non-cellular categories, where we continue to broaden our range. With confidence in our future, we are reiterating our guidance for this year's Headline earnings."
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