Carphone Warehouse gets best-buy boost

Carphone Warehouse today upgraded its profits forecast for a third quarter in a row, despite falling sales at its European business.

The UK retailer lifted its full-year earnings guidance due to expectations that a profit-sharing agreement with Best Buy’s mobile phone retailing operation in the United States will generate up to £100m (€112m) for the company following another strong quarter of trading.

But its core European business saw a 1.7% decline in like-for-like sales in its fourth quarter as it faced strong comparatives with the previous year.

The group said an 8.8% drop in connections to 2.6 million was due to an increase in the number of customers moving to 24 month contracts instead of signing up for a year.

Operating profits at its European business were likely to be up by between 15% and 20% in the full-year as it continued to benefit from sales of smartphones and ’tablet’ computers.

Best Buy’s mobile phone retailing business in the US saw connections growth of 25.9% to 1.8 million in the quarter after it opened new stores.

The business is now expected to make profits at the top end of its previous guidance of between £90m (€100.7m) and £100m (€112m) in the year to the end of March, it added.

Shares were up 2% after the company said earnings per share were likely to come in at between 14.5p and 15p, compared with previous guidance of 13.5p to 14p.

Chief executive Roger Taylor said the business was well placed to continue to take advantage of new smartphones and tablet computers as they come to market.

The UK mobile phone retail business is now part of Best Buy Europe, which is a 50-50 joint venture with Best Buy and also features the recently-launched Big Box consumer electronics stores.

The group has so far opened eight Best Buy electrical stores in the UK and plans to open three more over the summer.

Carphone sold half of its retail business to Best Buy for £1.1bn (€1.2bn) in 2008 before demerging its TalkTalk broadband arm last year.