Pre-pay decline affects Carphone Warehouse sales
Mobile retailer Carphone Warehouse Group said continued weakness in lower value prepay market in its fourth quarter had resulted in a like-for-like revenue fall of 5.5%.
However, the company said it would meet forecasts for 2011-12 earnings due to growth in sales of non-cellular products such as tablets and accessories, as well as new smartphones. The company said in November that its full year operating profit would be at the lower end of a forecast of between £135 million and £150 million.
Carphone Warehouse said it estimates that the overall prepay market in the fourth quarter was down 30-40% in the UK, driven by a lack of attractively-priced smartphone products in this segment, and a weak consumer environment. As a result, total like-for-like revenue had fallen 5.5%, with total connections down 19%.
The company said it had continued to roll out its new Wireless World format and had 392 stores across the group as at the end of March 2012. It anticipates that the large majority of UK stores will be in the new format within the next 2 to 3 years.
It also said that all the leases on the Best Buy UK 'Big Box' stores had now been assigned or were under option, with the majority of employees being offered alternative roles within the business.
Roger Taylor, chief executive officer, said: "We expect to deliver full year profits for CPW Europe in line with guidance, despite the market shift from 18 to 24 month contracts, a material decline in the prepay market and a tough consumer environment."
"Although the prepay market remains weak, we have some reason to be more optimistic about the increasing presence of smartphones in this segment in the year ahead."
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