Carphone Warehouse confident low-cost smartphones will aid turnaround

Carphone Warehouse, Europe's largest independent phone retailer, is optimistic that new, low-cost smartphones will boost consumer demand in the pre-Christmas sales period.

Carphone Wharehouse hopes low-cost smartphone sales will help its fortunes.

The company, which posted less-than-feared first-quarter results  said that business at Carphone Warehouse Europe (CWE) had been driven by robust demand for smartphone products such as Samsung's Galaxy S III, according to Reuters. Sales at stores open for more than a year fell 2 per cent in the quarter, to June 30, which was a better result than the 5.5 per cent decline some had expected.

CEO Roger Taylor said that prepaid smartphones priced from below £50 to £80, from companies such as Nokia and LG Electronics, were coming to the market for the back-to-school season.

He told Reuters that these prices "will be in the sweet spot for us starting to get smartphone penetration in the wider market."

However, CWE said that the European retail market will remain challenging with regulation and competition continuing to impede progress, but is confident about the near-term future due to "strategic positioning and operational execution" according to Mobile Today.

Taylor also believes the handset retail business is changing. "I'm quietly optimistic at this stage that the ingredients appear to be lining up for a much better prepay market this year," he told Reuters, noting that both handset manufacturers and subsidy-providing operators were being supportive.

Of particular note, CWE's Virgin Mobile France joint venture managed to exceed first-quarter sales expectations, against the trend being experienced by its much larger rivals. The MVNO posted revenue growth of 13 per cent to €122 million, down from 21 per cent growth in the previous quarter but beating analysts' consensus forecast of 7 per cent.

Taylor said that Virgin Mobile France had "weathered the storm" of this year's launch of Free Mobile. "We moved very quickly in terms of getting our offers aligned to the marketplace," he told Reuters.

For more:
- see this Reuters article
- see this Mobile Today article

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