Poor UK sales pull down Carphone

Carphone Warehouse suffered more bad news in the UK as it revealed that its domestic performance had dragged down its European sales.

Just weeks ago, it emerged that the company might shut down its Best Buy "big box" stores. Yesterday, the mobile-phone retailer announced that sales across Europe in the three months to the end of May had fallen by 3.3 per cent compared with a year earlier. Its chief executive, Roger Taylor, blamed British consumers moving to 24-month contracts and a weak pay-as-you-go market for the drop in sales. He added that the rest of Europe had experienced growth. The longer contracts meant customers delayed up to 100,000 renewals in the first quarter.

While its tie-up with Best Buy in the US continues to grow – with connections up 12.3 per cent – the same cannot be said of its Best Buy UK superstores. Carphone revealed last month that losses at the division had almost tripled last year to £62.2m. The company is reviewing the venture, with analysts predicting the stores may be shut down. It said yesterday it was still evaluating the operation and would update the market "in due course".

Yet analysts at Credit Suisse backed the group's performance, saying its sales had come in better than expected in Europe and at its Virgin Mobile France venture. Carphone said there had been a "material impact" for tablet sales in the first quarter, and Mr Taylor added it had been a "satisfactory start to the year".