Carphone Warehouse lifted by Best Buy US mobiles surge
Carphone Warehouse upgraded its profits for the third time in six months today, in the week it opens the first of its Best Buy Europe electronics superstores.
The mobile phone chain's chairman, Charles Dunstone, who has overseen the demerger of Carphone from the internet and telecoms business TalkTalk, said today's upgrade was thanks largely to the sale of mobiles through Best Buy's chain in the US. The shares rose 7p to 201¾p.
"When we started out our US venture with Best Buy we had just 1% of the market. Now we regularly top 5%. Smartphones have driven sales, with the iPhone leading the way, but plenty of other models selling strongly," he said.
The final quarter improvement means profits for the year just ended will be £7 million better than analysts expected, at about £39 million.
Dunstone admitted that now was not the easiest time to launch an assault on the British retail market with consumer confidence fragile. But he shook off worries about falling margins at rival electrical stores.
"We will very much be playing our own game. Best Buy is a lot more like Carphone than it is like other UK retailers. We still plan to open eight by March 2011 but we have to see how they trade before we commit fully to having 100 by 2013," he said. The store opening this week will be in Thurrock, Essex.
Dunstone also provided estimates for performance to March 2012.
He expects the Carphone Europe high street business to show flat to 3% growth with earnings rising between 15% and 20%. Similar earnings growth should come from Best Buy Mobile in the US. Best Buy stores in the UK will make an operating loss of £40 million to £50 million with up to another £40 million spent on openings. Joint venture Virgin Mobile France should move into profit, making about £5 million for Carphone.
Taken together, Dunstone said, these should mean a rise in group earnings of 40-45%.
