Carphone Warehouse reiterates guidance

Mobile communications devices seller Carphone Warehouse has reiterated its full year headline earnings guidance after the group's fiscal third quarter saw a glut of contract renewals coinciding with the release of new smartphones.

CPW Europe, the group's joint venture with US consumer electronics giant Best Buy, performed strongly on post-pay (contract) sales, while demand for tablet computers and hand-held devices (other than mobile phones) was strong, leading to a 15% year-on-year increase in what the company refers to non-cellular revenues. The company plans to move more deeply into this market.

The pay-as-you go segment remained weak, as expected, with sales down significantly on the year before, contributing to a 4.7% decline in like-for-like sales in the three months to the end of December. Carphone Warehouse estimates that the pre-pay market was down 35% to 40% year-on-year in the final quarter of 2011. This was driven by a reduction in subsidies from the networks in low-end pre-pay, a lack of smartphone product in this segment, and a weak consumer environment, the company said.

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The company expects the less favourable pre-pay dynamics will remain, but they should be partly offset by non-cellular revenue growth.

The roll-out plans for the group's Wireless World stores are on track, with 294 Wireless World stores open across Europe at the end of 2011. The group expects to have more than 375 of these stores open by the end of March.

Virgin Mobile France, meanwhile, saw revenue growth of 15% to £109m, though once again it was the contract sales that generated the growth, as the unit reduced its focus on pay-as-you-go phones. Around 70% of Virgin Mobile France's mobile phone customers are now on contracts. The group has a 47% stake in Virgin Mobile France.

"The consumer outlook remains challenging but CPW Europe is strongly supported by continued momentum in its post-pay business and by the roll-out of our Wireless World format and wider offering," the company said.