Business Watch: Carphone in 2009

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The newly engaged Charles Dunstone found a fresh reason to celebrate as Carphone Warehouse’s UK retail arm delivered impressive Christmas sales in a doom-filled market.

But that was only half the story, with the founder and chief of Europe’s largest mobile retailer warning of tougher times ahead – and telecoms and retail analysts in the City of London fretting about an uncertain 2009 for the company.

Dunstone reckons the mobile market didn’t grow over the crucial festive sales period – if anything, it fell. “That makes our like for like sales growth of 8.3 per cent in the UK all the more creditable,” he boasted, as Carphone detailed sales figures to the 13 weeks to December 27.

“It is certainly a case of winning market share but you won’t find many sales figures like that anywhere along the high street.”

A fair point, but then mobile phones are so far proving to be a much less cyclical product than most other consumer goods. To Carphone’s credit, however, the company played on its strong network relationships and gave its figures a boost thanks to last year’s move to laptops and other gizmos besides mobiles.

Dunstone reckons the company stole market share from its rivals across Europe in an otherwise declining market; and pointed with pride to Carphone’s more than 30 per cent of the entire UK prepay market over Christmas.

But while mobile connections across the European retail division – now half owned by American electrical giant Best Buy – were up three per cent to 3.7m, that was well below 9.4 per cent growth in the previous quarter when Carphone got a massive boost from the 3G iPhone.
And higher sales compared with last Christmas came at a cost as the group cut handset prices to buoy sales and aggressively pursue market share.

Dunstone warned that Carphone’s retail margin is likely to fall 150 basis points over the year – putting it below analysts’ forecasts prior to the results announcement.

 

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