Carphone: Best Buy revenues up 6.5 per cent

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Carphone Warehouse’s Q3 results have shown TalkTalk revenues to be down two per cent but Best Buy Europe revenues are up 13 per cent to just over £1 billion.

In the UK, revenues are up nine per cent from the same time last year to £488 million. While it is Best Buy’s highest revenue generating market, it has generated the least percentage of revenue increase for the quarter, behind France at 33 per cent, Germany at 19 per cent and Spain at 11 per cent.

Mobile connections were up three per cent to 3.7 million, with the company declaring its performance “reflected continued strong market share gains in a declining handset market”. It went on to say it achieved prepay record market share of more than 30 per cent over Christmas.

And while TalkTalk revenues were down two per cent to £347 million, it added 73,000 new customers, claimed low churn and a broadband ARPU increase of five per cent to £23.13.

Chief executive officer Charles Dunstone deemed the figures a “very creditable performance in an extremely challenging environment” but said the company would look to tighten costs.

Said Dunstone: “We have grown our retail market share, thanks to great products, competitive pricing and an excellent effort by our people. Our broadband business continues to make good progress, with churn falling and ARPUs rising. The ever-improving quality of the service, combined with its clear value proposition, positions the business well for the year ahead.

“Whilst we have always demonstrated our commitment to managing the business for longer term value creation, we recognise that in the current climate there is a balance to be struck between these strategic aspirations and the shorter term protection of our cash resources and a focus on costs and efficiency.

“We are today therefore outlining our key strategic priorities for the next 15 months, which will aim to combine improved clarity for shareholders with disciplined cost control and strong cash generation.”

The company’s growth goals include building market share in the European consumer electronics market, as well as handset, broadband and laptop market. The first Best Buy branded ‘big box’ stores are to open in the UK later this year.

The company outlined its strategy in a statement: “We are making cash generation a priority for the business. Within the TalkTalk Group, highly visible income streams, falling capital expenditure and stable acquisition costs should enable us to generate in excess of £100m of operating free cash flow.

“Within Best Buy Europe, we are targeting a figure of £50m (before big box investments), based on an improved focus on working capital management and a reduction in capex in the existing retail business. In addition, as part of the annual budgeting process taking place over the next few weeks, we will also review our operating cost base and structure in detail, with a view to ensuring it is consistent with anticipated revenue and margin trends in the year ahead.”

The company’s structural review, announced in November, will be concluded during the year.

Meanwhile, in a media conference call this morning, Dunstone revealed his aim to rebuild the company’s relationship with Vodafone.

He also said Carphone would continue with an aggressive stance on pricing.

“February will be tougher as it’s coming out of the sales period. People have money to spend but want a bargain,” he said.

 

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