Phones 4u’s profitability was hit by higher claims costs in the group’s mobile phone insurance business in 2011, the company revealed today.
The retailer said growth was strong with turnover up 11% year on year to £975.8m and a 7.4% rise in market share with new and upgrade contract volumes up 7% in the same period.
However, higher claims costs due to the rising numbers of smartphones in the market had hit profitability, the retailer said.
Phones 4u's burgeoning retail estate had driven growth in 2011 with 84 new stores opened during the year, taking the total number of stores to 586.
Of the 84 new stores opened in 2011, 42 were new store-in-store units at Dixons, signalling the ongoing success of Phones 4u’s partnership with the electronics retailer, which launched in 2010.
There are now a total of 93 store-in-store units within Dixons stores, which are aimed at reaching a broader demography of consumers for Phones 4u and strengthening both companies' drive into the converged market.
Phones 4u CEO Tim Whiting (pictured) 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 have 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 smartphones 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.’