Carphone Warehouse reiterates guidance

LONDON (ShareCast) - Mobile communications devices seller Carphone Warehouse has reiterated its full year headline earnings guidance after the group's fiscal third quarter saw a glut of contract renewals coinciding with the release of new smartphones. CPW Europe, the group's joint venture with US consumer electronics giant Best Buy (Dusseldorf: BUY.DU - news) , performed strongly on post-pay (contract) sales, while demand for tablet computers and hand-held devices (other than mobile phones) was strong, leading to a 15% year-on-year increase in what the company refers to non-cellular revenues. The company plans to move more deeply into this market. The pay-as-you go segment remained weak, as expected, with sales down significantly on the year before, contributing to a 4.7% decline in like-for-like sales in the three months to the end of December. Carphone Warehouse estimates that the pre-pay market was down 35% to 40% year-on-year in the final quarter of 2011. This was driven by a reduction in subsidies from the networks in low-end pre-pay, a lack of smartphone product in this segment, and a weak consumer environment, the company said. The company expects the less favourable pre-pay dynamics will remain, but they should be partly offset by non-cellular revenue growth. The roll-out plans for the group's Wireless World stores are on track, with 294 Wireless World stores open across Europe (Chicago Options: ^REURUSD - news) at the end of 2011. The group expects to have more than 375 of these stores open by the end of March. Virgin Mobile France, meanwhile, saw revenue growth of 15% to £109m, though once again it was the contract sales that generated the growth, as the unit reduced its focus on pay-as-you-go phones. Around 70% of Virgin Mobile France's mobile phone customers are now on contracts. The group has a 47% stake in Virgin Mobile France. "The consumer outlook remains challenging but CPW Europe is strongly supported by continued momentum in its post-pay business and by the roll-out of our Wireless World format and wider offering," the company said.