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Carphone Warehouse: No Return To Boom And Bust

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http://www.cnbc.com/id/32100069

There Won't Be Another Downturn: Carphone Warehouse

Published: Thursday, 23 Jul 2009 | 6:20 AM ET Text Size By: Reuters

Telecoms and retail group Carphone Warehouse is optimistic consumer markets will not suffer a fresh downturn, it said on Thursday, as it met or just beat first-quarter revenue and customer growth forecasts.

The British firm also said it hoped to complete plans to split its TalkTalk telecoms business from its Best Buy Europe retail venture in March and that it was on track to meet its full-year financial targets.

Chief Financial Officer Roger Taylor told Reuters it was too early to say consumer demand was recovering, although Carphone [CPW-LN 170.75 4.75 (+2.86%)] had seen strong demand for Apple's [AAPL 156.74 5.23 (+3.45%) ] new iPhone in recent weeks.

But consumer markets appeared to be experiencing a period of "prolonged stability", he added. "I'm more optimistic we're not going to go into a further downturn," he said in a telephone interview. Taylor's comments add to growing signs the worst is over for Britain's retailers.

Fashion chain Next [NXT-LN 1653.00 -18.00 (-1.08%)] and supermarket group Morrison [MRW-LN 267.25 -2.00 (-0.74%)] said on Tuesday they would beat profit forecasts, while home improvements group Kingfisher [KGF-LN 200.75 -5.25 (-2.55%)] reported better-than-expected second-quarter sales on Thursday.

Carphone said TalkTalk revenue fell 2 percent year-on-year to 340 million pounds ($557 million) in the three months ended June and it added a net 47,000 new broadband customers, beating analysts' average forecast of 37,000 in a company poll.

Revenue at Best Buy Europe, Carphone's joint venture with U.S. electricals retailer Best Buy [bBY 35.92 -0.49 (-1.35%) ], were 773 million pounds, up 6 percent year-on-year, or up 0.7 percent on a constant currency basis.

"A solid quarter ... slightly ahead of expectations," was the conclusion of Credit Suisse analysts in a research note.

At 0805 GMT, Carphone shares were up 0.8 percent at 167.25 pence, valuing the business at about 1.5 billion pounds.

The stock lost three-quarters of its value last year as the recession took hold, but has since bounced back from a low of 82.5 pence.

Splitting in Two

Carphone believes its two businesses will be valued more highly by investors if separated and said in June it planned to complete the demerger by July 2010 at the latest.

Taylor said he was now "pretty optimistic" the demerger could take place next March, as Best Buy Europe had agreed a new 350 million pound banking facility, which was a key precondition.

Carphone is Europe's biggest mobile phone retailer, with over 2,400 stores across nine countries.

The firm sold a 50 percent stake in its retail business to U.S. electrical goods group Best Buy [bBY 35.92 -0.49 (-1.35%) ] last year and the resulting venture, Best Buy Europe, plans to roll out a new chain of electrical goods stores across Europe, starting in Britain next year.

Taylor said the venture had signed leases for two stores and was close to signing another three. It had also identified 10 more sites for opening later next year, he added. Carphone is also Britain's biggest provider of residential broadband after its 236 million pound purchase of Tiscali UK, which completed earlier this month.

Taylor said the firm planned to announce a decision in October on whether it would become a television operator by expanding the Tiscali TV service.

Carphone said it was on track to meet its full-year financial targets, which include generating over 150 million pounds in free cash flow and delivering earnings per share growth of 10 percent, including the Tiscali deal.

Look for a total commercial sector collapse in the next 12 months then.

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http://www.cnbc.com/id/32100069

There Won't Be Another Downturn: Carphone Warehouse

Published: Thursday, 23 Jul 2009 | 6:20 AM ET Text Size By: Reuters

Look for a total commercial sector collapse in the next 12 months then.

At least CarPhone Warehouse don't try and distance themselves from their sales practices. I have used them a couple of times, and when the product didn't work I took it back and they fixed the problem. I think they will survive.

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I actually took the time to send them a thank you email after I was so impressed by the service of their staff when I took my £6.00 (six pound) pay as you go phone in with a problem.

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I actually took the time to send them a thank you email after I was so impressed by the service of their staff when I took my £6.00 (six pound) pay as you go phone in with a problem.

That's the thing. This is a company that has built itself on good service. Companies like that will survive. The rest will always feel hungry no matter how big they get, and hopefully they will be so eager to come up with new and innovative ways of fleecing the customer that they will fall down in a finance inspired mire at some point.

I like the fact that CarPhone Warehouse was a relatively small company (and British at that - an antidote to the Eurotrash competition) that offered good service then in time, as they grew, built themselves into a bigger one through good old fashioned good management and solid aquisitions.

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