Carphone Warehouse Europe’s Q4 sales fell 1.7% while its connections dropped 5.2% year on year, the company reported today.
In its Q4 trading update for 2010/11, the company said it expects to deliver 15%-20% EBIT growth this financial year with full year like-for-like sales growth of 0.9%.
Carphone Warehouse said the fall in connections is due to ‘the previously reported lower demand for high-end prepay connections and more recently the impact of the shift from 18 month to 24 month contracts in the UK from mid-2009 onwards.’
It added: ‘Q4 like-for-like sales were down 1.7%, against tough comparatives, and Q4 connections were down 8.8% year on year to 2.6m. Whilst the shift to 24 month contracts affects the volume of upgrade connections, it does not affect our lifetime income from the postpay upgrade segment following our previous move to greater alignment with the network operators.’
In the year to 2 April 2011 connections fell from 12,496 to 11,845 at Carphone Warehouse Europe and Best Buy UK - a fall of 5.2%. However, at Best Buy Mobile US, connections showed strong growth of 28% in the same period.
Growth was also bolstered by the Virgin Mobile joint venture in France which had an impressive quarter, delivering 161,000 net customer additions, taking net additions for the year to over 200,000, well ahead of the company’s previous guidance of 50,000 to 100,000 net additions for the full year.
Carphone Warehouse Europe continues its shift to franchised stores. Over the year to April 2011 directly owned store numbers dropped from 2,224 to 2,186, while franchised store numbers went up from 206 to 243 with the total number of stores standing at 2,429, one less store than in April 2010.
The company also plans to open 400 Wireless World stores by April 2012. It currently has around 106 Wireless World stores.
Carphone's CEO Roger Taylor said: 'For the third consecutive quarter, we are increasing our guidance for full year earnings per share. We believe we are well positioned to continue to capitalise on the rapid development and proliferation of smartphones and the ever-expanding range of tablets coming to the market, despite the uncertainty around the economic environment.
'The upgrades in earnings per share throughout the year have been greatly assisted by the strong performance of Best Buy Mobile US, which continued throughout the fourth quarter, reflecting its differentiated proposition and excellent operational execution. Full year profits from Best Buy Mobile are now expected to be towards the top end of the £90m-£100m range.
'Despite the tough economic environment, CPW Europe has performed well, with an encouraging improvement in performance by some of its operations outside the UK, and is expected to deliver full year profits in line with previous guidance.
'With eight ‘Big Box’ stores now open, as well as its online platform, Best Buy UK continues to deliver high levels of customer satisfaction and a differentiated service proposition.
'Virgin Mobile France had an outstanding fourth quarter, delivering customer growth well ahead of expectations, and setting the business up for further good revenue growth in the current financial year.'