Carphone looks forward to Christmas as sales jump 62%

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The Independent Online

Carphone Warehouse, the mobile phone retailer, provided an upbeat outlook on its prospects yesterday as it presented its first financial report since its flotation in the summer.

Carphone Warehouse, the mobile phone retailer, provided an upbeat outlook on its prospects yesterday as it presented its first financial report since its flotation in the summer.

Unveiling a 62 per cent jump in turnover for the half-year to 23 September, Charles Dunstone, chief executive, said: "The market has been robust so far this year." He added that he was "bullish" about the forthcoming holiday period. He said: "Operators are anticipating a busy Christmas. They are all advertising heavily." Carphone shares, which floated at 200p in July, closed up 7p at 198p, their highest level for six weeks.

Pre-tax profits, stripping out one-off items, were flat in the period at £4.6m, compared with £4.7m the previous year. The company gained £16.5m from an investment by America Online in its MViva wireless internet division. But exceptional outgoings included a £3.5m charge related to the reorganisation of its recently acquired Tandy business and a £2.7m hit resulting from "a simple restructuring of the group's share capital" ahead of its July float.

The jump in sales came as the company connected 1.4 million customers in the half-year, up 74 per cent on last year. Mr Dunstone said: "There is a continued cycle of people replacing handsets, which is driven particularly by fashion and new technology."

Mr Dunstone admitted that he shares the disappointment of many at the slow and limited service provided by the first models of wireless application protocol phones. He said: "You have got to be busting to get hold of the information to dial it up [on a WAP phone]." But he added that the introduction of General Packet Radio Switching (GPRS) phones, which are expected to reach the high street in the new year, could prove the turning point for so far sluggish sales of internet-enabled handsets.

David Ross, chief operating officer, said recent developments in the telecoms sector "continue to play into our hands". He said the multi-billion pound auctions for third-generation licences, which have taken place in countries such as Italy and the UK, have encouraged phone companies to step up their marketing campaigns in order to attract new customers and justify their heavy investment in networks.

Mr Ross added that the entry of new operators into existing markets was also beneficial to Carphone Warehouse. He said: "They don't have large existing store portfolios, so there is even more need for an independent retailer."

Mr Ross said Carphone's European expansion strategy was progressing well, with Germany proving to be a particularly strong market. But he added that France had been "quiet" in the period.

The integration of the Tandy portfolio of 270 shops was also on target, with 40 stores having been sold on piecemeal to third parties and a further 20 outlets earmarked for disposal. Carphone now has a total of 1,009 stores spread across 14 countries and is considering expanding into "one or two" European markets.

Carphone clocked up 30,000 users for its MViva web portal, but said revenues from the service were "negligible" in the period.

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