Phones 4u blames 2011 full year profit dip on increasing cost of paying out on insurance claims on more costly smartphones, but says that its retail business is healthy and growing
Phones 4u saw a three per cent fall in profits over 2011 despite an 11 per cent revenue increase as the increased cost of paying out for smartphone inusurance claims offset higher margins from its retail stores.
Turnover for 2011 was £976 million compared to £881 million in 2010.
EBITDA was £124 million, down from £128 million over the previous 12 months.
Phones 4u CEO Tim Whiting hailed the growth of the firm’s retail estate.
The firm opened 84 stores taking the total count to 586. The new stores included 42 at Dixons branches, taking the total number of in-store units to 93.
Whiting said: “By focusing on our customers and their needs we have maintained good momentum in the marketplace and we have increased our connection volumes which has driven a significant improvement in market share.
“This increase has delivered us strong growth, which is particularly pleasing as it has been achieved in a highly competitive market.
“Whilst this strong growth has led to margin improvement in our store network, it has been offset by an increase in claims costs in our insurance business which is principally due to a higher proportion of smart phones in the market.
“I am pleased to say that the momentum we achieved in 2011 has continued into 2012 as a result of Phones 4u’s strong market positioning on the high street and our ability to offer customers excellent service and expert, independent advice.”