CARPHONE Warehouse raised earnings predictions for its European arm in the current financial year and reported strong progress at its US division, today.
The group was formed after last year’s demerger from broadband operator Talk Talk and comprises a 50% share in US electricals retailer Best Buy, a 47.5% stake in Virgin Mobile France, and its own expanding UK Carphone Warehouse (CPW) stores division Wireless World.
Group earnings before interest and tax for the year to March 31 rose 67% to £63.3m.
On a pre-tax profit basis it made £67.2m compared with £218.4m, but this reflects the investment in rolling out its Best Buy UK and Europe chains, including a ‘Big Box’ superstore in Aintree, and post-demerger costs.
CPW Europe grew its earnings before interest and tax (Ebit) by 18% to £134.6m due to the increasing penetration of smartphones.
It said its 106 Wireless World stores are also excited about the “ever-expanding” range of tablet devices coming to the market, with forecasts for the size of this market increasing all the time.
Best Buy Mobile US had an “outstanding year”, the group said today.
Despite the US boasting more than 280 million mobile phone accounts CPW said, surprisingly, the US consumer has lacked a decent retail offer of choice and impartiality.
CPW has installed a Best Buy Mobile store-within-a-store in all of Best Buy’s 1,101 Big Box locations which has resulted in clinching a 5% share of the mobile market compared with 1% when the venture began in 2006 and a 28% increase in connections to more than 7 million. This increased Best Buy Europe’s share of profits by 111% to £97.9m.
However, the group is evaluating the roll-out of its Best Buy Europe operation after losses rose from £21m previously to £62m.
Virgin Mobile France recorded an “extremely successful year”, turning around an Ebit loss of £22.2m to an Ebit profit of £20.6m.
Looking ahead, the group said it expects CPW Europe to make an Ebit profit of between £135m to £150m in the current financial year, depending on the important Christmas trading period.
CPW chief executive Roger Taylor said today: “This has been a year of considerable success for the group, during which our businesses have made impressive progress.
“The group is well positioned to maintain this momentum, despite the tough economic environment.”
Announcing a 5p dividend for shareholders he added: “This combination of financial strength and positive outlook likes behind the inauguration of our progressive dividend policy.”
