Carphone Warehouse sees strong third quarter
Retailer to compete with BT for fixed line customers
January 22 2003
Carphone Warehouse saw like-for-like profits increase by 6.9 per cent in the 13 weeks to December 28, with like-for-like sales up 9.1 per cent.
The UK’s biggest mobile phone retailer is to launch a fixed line telephone service in competition with BT, and is also optimistic about the growth potential of new technology such as picture messaging.
The company saw total connections increase by 16.3 per cent to more than 1.3m, while customers whose contracts are managed by the company itself, and important source of ongoing revenue, rose by 10 per cent to 176,000.
Chief executive Charles Dunstone said: “The Carphone Warehouse has had a good Christmas and a good third quarter, continuing the growth that we achieved in the first half. Coupled with a very promising start to January, this positions the group well to deliver profit before tax in the current financial year in line with consensus market forecasts.
“We achieved strong connections growth across the group, stimulated by new handsets, new services, and the return of some subsidy into the pre-pay market, as we highlighted in our interim results. Particularly notable was the growth in our businesses in The Netherlands, Spain, Sweden and Switzerland, which together represent almost 20 per cent of group connections. I believe this demonstrates the speed at which many of our non-UK businesses are building scale and profitability, which is very encouraging for the future.”
In the four weeks to December 28, like-for-like sales were up 14 per cent, with total connections up 11.1 per cent and subscriptions up 8.8 per cent. In the thee weeks to January 18, total connections were up 21.8 per cent to 281,000, and subscription connections up 14 per cent to 118,000.
Dunstone said: “Our like for like performance over the Christmas trading period was stronger than the third quarter as a whole. We achieved good growth in like for like sales and gross profit in our core UK market. Excluding SIM-free sales, which were down on December 2001, our UK connections rose by 7.6 per cent. Our non-UK businesses traded very strongly, and across the group we continued to see a sharp improvement in subscription connections.”
On the new fixed line offer, he said: “We will be formally launching our residential fixed line telecoms service in all our UK stores next month. The ability of customers to switch their fixed line calls from BT, to do so simply and rapidly, and at lower cost, has been transformed through automated Carrier Pre-Selection. We believe that as a trusted mobile telecoms adviser connecting over 2m customers in the UK each year, The Carphone Warehouse is uniquely placed to offer compelling rates and deliver significant savings on customers’ existing home phone bills.”
He added: “2003 has started well. Overall connections are up 21.8 per cent in the first three weeks, and subscription connections are growing at 14.0%. Whilst this is against a relatively weak comparable period, the growth in subscriptions highlights our differentiated offering and remains central to our strategy of building recurring revenue streams, a significant element of which is derived from these higher value customers.
“The new product pipeline is healthier than it has been for some time. We are confident that the increasing popularity of camera phones and picture messaging services, supported by the progressive development of network interoperability, as well as the wider adoption of colour screens, will help drive customer demand for new handsets. In addition, the launch of a commercial 3G service in the UK may further stimulate the market.
“Our aim is to continue to gain market share profitably through offering the best advice and the widest choice to customers, and delivering high value customers to the networks, thus continuing to improve earnings visibility through our recurring revenue businesses. 2002 was a successful year in these respects, and we intend to build on this in 2003.”
