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Business News

Carphone shares soar on dividend promise

Carphone Warehouse has pledged more cash to promote its Best Buy electronics megastores as it looks to establish the fledgling brand in the UK.

The group saw it shares jump 11 per cent to 341.75p yesterday as it also said it expected to pay its first dividend at the end of this financial year.

The company, which opened its sixth "Big Box" outlet in Derby yesterday, said customer feedback had been "highly encouraging" but it needed more marketing than planned as it establishes the brand against rivals such as Comet and Curry. As a result it raised it forecast for losses from Best Buy UK to £50m-£55m, up £10m on its forecast in April.

Carphone's Best Buy Europe business, which also includes its high street mobile phone stores, is a 50-50 joint venture with US firm Best Buy.

Carphone raised its guidance for full-year results yesterday after strong demand for smartphones resulted in a sharp jump in its share of profits from Best Buy Mobile US, the mobile phone retailing operation in the US. It said Carphone's core stores in Europe continued to perform strongly, with like-for-like revenues up 2.4 per cent in the first half and pre-tax profits of £23.7m. Underlying earnings rose 56 per cent to £44m.

The chief executive, Roger Taylor, said: "We have delivered a strong first half with good performances across all our businesses, and we are raising our guidance for the full year."

Carphone sold half of its retail business to Best Buy for £1.1bn in 2008 before demerging its TalkTalk broadband arm earlier this year.