Carphone targets pre-pay revival

Carphone WarehouseCarphone Warehouse said profits growth in its UK business stalled after a slide in its pre-pay market.

Pre-pay volumes slumped by as much as 40% in some of its markets but the group is hopeful of reviving demand this year by launching more affordable smartphones to attract shoppers who do not want to sign up to contracts.
It recently started a Deal of the Week promotion, which for the first time offered a Windows operated Nokia handset for under £100, and hopes manufacturers will produce cheaper smartphones this year.

The group, whose Carphone Warehouse Europe division has 2,400 outlets, said underlying earnings rose 0.3% to £135 million in the year to the end of March.

The division, which suffered a 5.5% fall in revenues, was also hit by cuts in subsidies from major networks and the recent trend for mobile phone contracts shifting to 24 months instead of 18 months.

Carphone warned that its markets were set to remain challenging but it would continue to roll out its Wireless World format to help grow sales of tablets, accessories and apps.

It had 392 stores in the format in March and plans to convert the vast majority of UK stores in the next two or three years.

Earnings for the current year are likely to be between £130 and £150 million, depending on its success in pre-pay markets.

Meanwhile, its failed BestBuy electronics joint venture in the UK racked up £72.5 million in losses as well as a further £120.9 million from closing the business, which ran 11 stores.

But group bottom-line pre-tax profits climbed to £762.2 million, up from £67.2 million, after it sold its stake in the BestBuy Mobile business in the US for more than £800 million.

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