1/19/2009 11:10:00 AM
Carphone tells departments to start cutting costs
Carphone Warehouse’s management team has been instructed to report back with cost-saving initiatives.
CEO and chairman Charles Dunstone has told staff that the retail and distribution business costs £800m to run a year, while the TalkTalk and AOL fixed-line division costs £550m a year.
All members of the ‘senior leadership’ team will now come back with their proposals on savings, with sources indicating a raft of job cuts in the coming months. Others say there are greater inefficiencies in the business that can be addressed before any impact on jobs.
Carphone is also looking to generate £150m in cashflow by March 2010 from profits derived from the TalkTalk business and as well as Carphone's retail and distribution operations.
The unrelenting growth in the business has never put cost under scrutiny to any great extent, but the drop in margins as Carphone aims to build on its record 30% market share over Christmas has made ‘efficiency’ a major consideration across the business.
Deliveries in stores are reckoned to become less frequent, and other areas of the logistics operation will also be analysed for cost-reduction. Elsewhere Carphone will look at its supplier relations as an area it can be more efficient.
Carphone sales staff have been instructed to maximise sales by pushing new products such as broadband services, as the company struggles against poor economic conditions and the week pound.
However, it emphasized that cost cutting would not come in the way of opening its large, out-of-town electrical ‘Big Box’ stores that it had outlined last year.
The company’s growth this year is anticipated to come from new categories, such as laptops and gaming, as well as the expansion of its ‘Wireless World’ store format that it already has in the new Westfield shopping centre, Romford, Bristol and Portsmouth.