Carphone Warehouse said it is looking to expand in markets such as China, Latin America and Eastern Europe in order to reduce its dependence on its core markets in the UK and France.
The decision comes amid the retailer posting lower sales in the fourth quarter to the end of March, when revenue fell by 5.5 per cent on year-over-year due to continued weakness in the prepaid mobile phone market. However, Carphone's Virgin Mobile France joint venture posted a 21 per cent rise in revenue, reflecting growth in the postpaid market. Europe's biggest independent mobile phone retailer said it is still on track to meet its earnings forecasts for 2011-2012.
Carphone Warehouse said it identified countries for expansion based on characteristics such as high a large population, and a competitive environment between networks. "They are all important dynamics," Carphone Warehouse CEO Roger Taylor old Reuters.
Taylor said Carphone would seek similar agreements to its Global Connect venture with U.S. retailer Best Buy. According to Reuters, the Best Buy plans to open 14 Best Buy Mobile SWAS stores within Best Buy's China branded stores, and the Global Connect agreement would entitle Carphone to a 20 per cent share of incremental earnings from these SWAS stores.
Carphone Warehouse is clearly looking for business opportunities in markets where there are more promising growth opportunities than in Europe, following continuing disappointing growth in the UK. "We estimate that the overall prepay market in Q4 was down 30-40 per cent in the UK, similar to Q3, driven by a lack of attractively priced smartphone products in this segment, and a weak consumer environment," Carphone said in a statement.
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