Carphone Warehouse upgrades expectations

Mobile phone retailer Carphone Warehouse today said third quarter trading was stronger than anticipated, and upgraded its full year profit expectations.

The London-based retailer, which manages customer accounts for mobile networks as well as selling mobile phone accessories and phone connections, said revenues in its retail and distribution operations grew 27.7% on a like-for-like basis.

It said subscription connections, which are more lucrative than pre-pay sales, saw growth of 30.1% to 690,000.

The group said a trend among customers towards upgrading phones rather than new connections to networks had continued to affect gross profit per connection.

But it said that trend had improved from the first half. Retail revenues were up by 32.8%, driven by the strong connections growth and further store openings.

Carphone has more than 500 stores and expects to increase that number to some 650 in the next 18 months.

The group has two call centres, which employ between 600-700 people. They are expected to increase that figure to about 1,000 in the short to medium term, while the group’s total headcount is expected to rise by about 1,000 in the next 12 months.

Carphone said it did not expect to follow other companies in moving call centre operations abroad.

Chief finance officer Roger Taylor said: “The quality of service and complexity of calls that our agents have to deal with makes it imperative to keep our call centres in the UK.”

The group’s telecoms services division, which manages accounts for phone networks, grew fixed line revenues by 47.8% to £63.1m (€91.2m).

The group’s fixed line Talktalk phone operation, which is provided by Opal - the telecoms group bought by Carphone Warehouse for £65m (€94m) a year ago - added 99,000 customers in the third quarter, taking the total to 239,000.

The group said TalkTalk remained on target to achieve 350,000-400,000 customers by March.

Carphone said the outlook for the retail business remained positive, with good market conditions in the last six months likely to continue into 2004.

“We are confident of further good progress, although the percentage growth rate in mobile connections in the next financial year is likely to be lower, given our increasingly strong performance in the current year,” the group said.