Carphone Warehouse sales drop by 3.3%

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Phone retailer sees customers at European stores fall by 5.5%, but dip is seen as temporary due to longer mobile contracts

Carphone Warehouse sales have fallen back in recent months, as a wave of UK mobile customers shift from 18-month to two-year contracts.

The country's largest phone retailer by turnover on Wednesday saw total customers across its 2,400 European stores drop by 5.5% in the three months to 2 July. Sales fell 3.3%. Mobile phone carriers have been switching customers to longer contracts in exchange for subsidising expensive smartphone handsets.

Carphone says the move will impact results for six months, before the longer contracts – of which the retailer takes a slice – begin to boost revenues.

Retail performance in Spain was particularly strong, and Carphone is capitalising on the revolution in personal computing by rolling out Wireless World shops, which sell a bigger variety of products than its existing outlets.

Chief executive Roger Taylor said: "We remain excited about the opportunites provided by our Wireless World store format, which is ideally suited to offer a wider range of products, including tablets – another area of potentially significant growth for the core retail business."

The company's "virtual" mobile networks – services that piggyback on masts owned by other carriers – continued to grow. Virgin Mobile France, already the country's largest virtual network, broke through its long-standing target of two million customers, with net customer addition of 68,000 and total revenue growth of 16% to €108m (£95m).

In the US, Best Buy Mobile is still surging with total connections up by 12.3% to 1.6m, although growth was not as fast as expected.

"The European retail like-for-like sales decline of 3.3% isn't quite as bad as feared, but that was boosted by good growth in Europe, meaning that the UK was well down, despite the promise of the big push into tablet sales," said analyst Nick Bubb at Arden Partners.

Credit Suisse pointed to "better than expected performance from Carphone Warehouse Europe and Virgin Mobile France".

Taylor reaffirmed the financial guidance given at annual results in June for the full year to march 2012, and shares closed nearly 7.5% up, rising 30p to 435p.

• Carphone Warehouse
• Telecommunications industry
• Mobile phones
• Retail industry

Juliette Garside

guardian.co.uk © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds

Josh Halliday 28 Jul, 2011

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Source: http://www.guardian.co.uk/business/2011/jul/27/carphone-warehouse-sales-drop
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