Carphone Warehouse dragged down by weak European sales

Weak pay-as-you-go (PAYG) sales in its European retail outlets are being blamed for a fall in Carphone Warehouse's first-quarter results.

The company said that sales until 31 March were 5.5 per cent lower at £3.3 billion for the quarter, and it warned that consumer sales in Europe remain difficult and forecast sales of new PAYG handsets to decline due to weak demand.

The company noted that this downturn was partly due to an overhaul of its Germany subsidiary, but it was hit elsewhere by a drop in PAYG sales of 40 per cent in some markets, according to The Guardian. The company has 2,400 retail outlets spread across Germany, Sweden, Ireland, the Netherlands, France and its second biggest market--Spain. The U.K. is its largest market with 800 stores.

However, underlying pre-tax profits at Carphone Warehouse rose 4 per cent last year to £58.3 million, prompting CEO Roger Taylor to say there was "some reason to be more optimistic about the increasing availability of lower-priced pre-pay smartphones in the year ahead," according to The Financial Times.

Commenting on this first-quarter performance, analysts at Singer Capital Markets predicted a positive response to the figures. "The stock has fallen by 23 per cent over the last 3 months but held up better in the last month, falling less than 5 per cent. The shares could go better given the recent slump," reported The Guardian.

The company confirmed that closing its ill-fated UK venture Best Buy Mobile has cost the group over £60 million, but it made $813 million from the sale of its interest in Best Buy Mobile.

The company said that it would push forward with the roll out of its Wireless World stores, converting the majority of U.K. shops in the next few years. Of note, Carphone Warehouse will open its first outlet in China at the end of this month.

For more:
- see this The Guardian article
- see this Financial Times article
- see this Mobile Today article
- see this City AM article

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