Carphone Warehouse is looking to cut costs across the business between now and March 2010 to weather the tough economic conditions.
It is also looking to generate £150m in cashflow by using profits from its fixed-line business as well as the retail business.
The company has pencilled in £100m from the TalkTalk business and £50m from the retail operations.
Carphone emphasised that the cost-cutting would not come in the way of it opening its large, out-of-town electrical ‘Big Box’ stores that it already outlined last year.
Carphone CFO and BestBuy Europe CEO, Roger Taylor, said the first store was still set for July or August this year with developments on locations well advanced.
Managing Carphone’s working capital has risen in importance after Carphone CEO Charles Dunstone admitted in its results briefing in November: ‘We might have got carried away with £1bn [entering] in our account.’
Taylor said today that the company was aiming for ‘a more neutral position’ with regard to working capital.
Carphone also said it would look to reduce its capital expenditure in a bid to cut costs this year.
Sources in the company said management have already been addressing costs across the business, from small areas at head office to improving its logistics and purchasing.
In its statement, Carphone said: ‘We will also review our operating cost base and structure in detail, with a view to ensuring it is consistent with anticipated revenue and margin trends in the year ahead.’
The strategy to increase market share will inevitably lead to Carphone offering sharper deals and discounting, but the company is keen to maintain its margins by being more efficient in its back office operations.
The company offered no more information about the hiving off the fixed line business from the retail business which it announced in November last year, but said it would be concluded at some point this year.
The company added: ‘Any change in structure recommended by the structural review is planned to be well underway by March 2010, subject to market conditions.’
Growth for Carphone this year is anticipated to come from new categories such as laptops and gaming, and expanding its ‘Wireless World’ store format that it has already started in the new Westfield shopping centre, Romford, Bristol and Portsmouth.
Separately, Dunstone also commented on the relationship with Vodafone. It is known that Carphone and Vodafone have been in discussions to bring Vodafone back to Carphone under Vodafone’s new UK CEO Guy Laurence.
It is believed Carphone even tested products such as Vodafone’s mobile broadband last year in anticipation of a potential return to Vodafone contracts.
Dunstone said: ‘We have a good relationship with Vodafone in the UK on various product areas and in other markets. I can’t say any more at the moment, but we would definitely like to be selling Vodafone subscriptions.’