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Bleak Times For Carphone Warehouse Ahead

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CPW's Dunstone admits 'dread' over state of the economy

Charles Dunstone, chief executive of Carphone Warehouse, has warned staff in an extraordinary internal email that the future is looking bleak for the firm unless it takes serious action to cut costs.

The mail, sent to us by a TalkTalk insider, begins reasonably cheerfully, noting the 6.5 per cent increase in like-for-like sales, but noted "despite the great sales figures, we actually made less money this year than last".

Dunstone warned that the next year will remain a very tough market coupled with the fact that suppliers, billing in dollars and euros, are likely to continue to put up prices because of the weakness of sterling.

He said the only way to stay competitive was to reduce costs.

The email said: "We are going to begin a programme of taking meaningful sums out of our costs. It takes a staggering £800 million pounds a year to run our retail and distribution business in the UK and rest of Europe and a further £550million to run our fixed line business; we have to reduce this figure."

Dunstone said he was asking managers to propose how to make savings.

Sounding an ever more desperate tone, the mail continued: "To my mind the next 12 – 18 months are about ‘staying alive’. Those who are still standing by 2010 will have a bright future, with much less competition to face for when the economy improves. Until that time, it is going to be a war... competition will be very aggressive and dying businesses can act irrationally ."

Dunstone said he needed two things from staff, declaring "Every pound is a prisoner" - staff must be more cost-conscious, and "we need to maximise every sales opportunity... The greatest return we can make as a business is by connecting more customers to our own network."

The mail added: "I am sorry to have to send such a grim message, but I feel it is my duty to prepare us for the worst; everything I read and observe fills me with dread for the state of the whole global economy. Every single one of us is now paying for the mistakes that were made by financial institutions and their regulators over the past decade.

A spokesman for the firm said it did not discuss internal emails.®

http://www.channelregister.co.uk/2009/01/16/carphone_letter/

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I have been bearish on carphone warehouse as a stock for some years now, despite the outward gains it has been reporting.

The reason is that the model for phones is shifting from acquisition of customers to retention. Or in other words it is no longer the case you win business by offering someone a new contract and phone. You accept that everyone that wants a phone has one, so you just offer them a cut price subscription.

CPWH and other still push the old model by sending you a new phone when your contract runs out. But pretty soon, or indeed nowish, people will relize that they don't need a new handset every year, they are better just keeping one for a few years at least and taking the lowest cost plan they can get.

This shifts power from handset sellers like CPWH, to the companies operating your subscription.

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I visited a CPW this week. It was tacky and untidy. The staff ignored me, and when I eventually persuaded a young guy to speak to me, his product knowledge was appalling.

Totally unprofessional.

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The mail, sent to us by a TalkTalk insider, begins reasonably cheerfully, noting the 6.5 per cent increase in like-for-like sales, but noted "despite the great sales figures, we actually made less money this year than last".

.

.

.

He said the only way to stay competitive was to reduce costs.

Seems obvious really. Its better to be cutting costs before you're losing sales rather than wait until after its started to happen. And if cutting costs lets you keep your prices down it may help keep sales from falling as much.

There's many a business today that would love to have the problem of a 6.5% increase in sales but lower profits due to an inflated cost base. After all there's more room for manoeuvre than with declining sales and less obvious flab to cut.

OK in this case the cost increase may have lots to do with exchange rates but its still better to be cutting while sales are going up than when they're going down. And its better to lay it on thick with the staff rather than let them get complacent because sales are up.

IMHO Anyone who hasn't already had a similar memo/email from their bosses ought to be worrying why not, and what the bosses are planning to do instead.

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I visited a CPW this week. It was tacky and untidy. The staff ignored me, and when I eventually persuaded a young guy to speak to me, his product knowledge was appalling.

Totally unprofessional.

After that email perhaps he'll feel the need to buck his ideas up a bit. ;)

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Guest theboltonfury
After that email perhaps he'll feel the need to buck his ideas up a bit. ;)

I have had my ps3 now so not really that bothered if they fold

Going into the shop to get my phone was a nasty experience

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Mobile phone shops are nearly as ubiquitous and pointless as estate agents. I've had mine for about five years now, had a couple of new batteries in that time as it seems to eat them. Bought it off t'internet. Ventured into one of those horrid places and some kid with a fat tie (an estate agent in waiting) sort of burbled at me. So I turned round and went out. I have no idea why they have shops in high streets, much less why there is not only more than one in each city but that there are multiple branches of the same brand in close proximity to each other and the supermarkets and electrical shops sell them anyway. Its ridiculous, how many phones are people getting through?

Just don't get it. I assume this means I'm terribly out of touch with how fashionable people spend their free time (in blummin' CarPhoneWarehouse attempting to understand the random noises their staff make it would appear).

Edited by Cogs

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I have been bearish on carphone warehouse as a stock for some years now, despite the outward gains it has been reporting.

The reason is that the model for phones is shifting from acquisition of customers to retention. Or in other words it is no longer the case you win business by offering someone a new contract and phone. You accept that everyone that wants a phone has one, so you just offer them a cut price subscription.

CPWH and other still push the old model by sending you a new phone when your contract runs out. But pretty soon, or indeed nowish, people will relize that they don't need a new handset every year, they are better just keeping one for a few years at least and taking the lowest cost plan they can get.

This shifts power from handset sellers like CPWH, to the companies operating your subscription.

I am amazed they make any money at all. My ISP is Talktalk owned by them, and I pay £20.99 a month for broadband and FREE calls 24/7 to any UK landline AND to many countries around the world (UK only is £19.99/month). This INCLUDES line rental from BT. It is absolutely incredible value, and the broadband, despite hearing some bad things to start with, is a rock steady 3Mbps all the time, never missed a beat. I have no idea how they make any money out of me at all :P

(OK it is "up to" 8Mb, but who gets that?)

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I am amazed they make any money at all. My ISP is Talktalk owned by them, and I pay £20.99 a month for broadband and FREE calls 24/7 to any UK landline AND to many countries around the world (UK only is £19.99/month). This INCLUDES line rental from BT. It is absolutely incredible value, and the broadband, despite hearing some bad things to start with, is a rock steady 3Mbps all the time, never missed a beat. I have no idea how they make any money out of me at all :P

(OK it is "up to" 8Mb, but who gets that?)

Interesting, I purchased a new Samsung PAYG mobile for 4.95 just before Xmas

Also interesting is that I received a job offer from them just over 2.5 years ago and declined it,

instead taking an engineering job at BT which I will loose in 2 weeks due to redundancy. :(

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The staff ignored me

I usually have the opposite problem, can't browse in peace without some pre-pubescent half-formed embryo that they've made a sales assistant badgering me.

Hate going into these places, so I don't. Bought my current phone online.

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no worries. they can scale back and change their name to Carphone Shop

Is it just me or is the name induce an instant negative synaptic snap, "Carphone" = the twit who almost wiped you out on the crawl to work.

F*CKERS my subconscious shouts as I stroll on.

Edited, does the filter instantly convert twit to twit?? Edited again, it does! twit t*** t*** t***

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I am amazed they make any money at all. My ISP is Talktalk owned by them, and I pay £20.99 a month for broadband and FREE calls 24/7 to any UK landline AND to many countries around the world (UK only is £19.99/month). This INCLUDES line rental from BT. It is absolutely incredible value, and the broadband, despite hearing some bad things to start with, is a rock steady 3Mbps all the time, never missed a beat. I have no idea how they make any money out of me at all :P

(OK it is "up to" 8Mb, but who gets that?)

Mine is running wireless at 54Mbps according to the monitor?!

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Mine is running wireless at 54Mbps according to the monitor?!

It's running at 54Mbps between your computer and the router. The speed that matters is the one between your router and t'internet.

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Or Carphone Kiosk.

:lol:

Edited, does the filter instantly convert twit to twit?? Edited again, it does! twit t*** t*** t***

no. but with a little tweaking you can use the word ****.

which incidently is the actual owner of the carphone whorehouse.

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no. but with a little tweaking you can use the word ****.

whats wrong with just using the word ****.

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  • 284 Brexit, House prices and Summer 2020

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