Carphone Warehouse to open 150-200 US mobile phone shopsForbes writes…UK mobile phone retailer Carphone Warehouse confirmed that it plans to open as many as 200 stores in the US over the next 18 months in partnership with US retailing giant Best Buy (nyse: BBY - news - people ).
The group also said it expects pretax profits for the year ending in March 2008 to be 225 mln stg, compared to around 120 mln in the year just ended.
In a strategy update, Carphone Warehouse said a 5-month US trial had produced ‘encouraging’ results, and that it would now open between 150-200 outlets in existing Best Buy stores before the end of 2008.
Finance director Roger Taylor said the US handset market, which is dominated by the mobile networks’ own brand outlets, is crying out for more independent retailers.
‘Buying mobile phones in the US is a horrible experience. The network stores are just there to push their own business and there’s very little in the way of impartial advice,’ he told Thomson Financial News in a telephone interview.
Increased spending on the Best Buy and Virgin Mobile France tie-ups would cost between 10-15 mln stg this year, and Taylor said that losses from all joint ventures would amount to some 15-20 mln in the current fiscal year.
However, Taylor said a swing into the black at its UK broadband division and growth at its core retail operation would boost pretax profits to 225 mln stg in the current fiscal year, compared to an expected 120 mln the previous year.
The dividend will be raised by 30 pct in the current year, he added, in line with underlying profits growth.
Carphone Warehouse also set out long-term targets for its broadband business. It is hoping to have signed up 3.5 mln users to its high-speed internet access service by March 2010, compared to 2.27 mln at the end of March 2007.
Since launching its cut-price TalkTalk broadband service this time last year, Carphone Warehouse has incurred start-up losses of 70 mln stg on top of the 370 mln it paid for AOL’s internet access business in the autumn.
And it recently warned that delays in migrating customers onto its own unbundled network would result in extra costs of between 10-15 mln stg over the current financial year, wiping as much as half from its original 30 mln stg forecast for the fledgling division.
Finance chief Taylor said the pace of migrating customers had improved dramatically over the past few months, with around 120,000 moving onto Carphone Warehouse’s network every month.
Until a customer is migrated, Carphone Warehouse must use a BT Group (nyse: BT - news - people ) wholesale broadband product, incurring a loss of 5 stg a month on each connection. By the start of April, Carphone Warehouse had only moved 700,000 of its 2.3 mln customers off the BT wholsale product.
The group also announced a change in how it presents its financial performance to the City.
For the purposes of results, Carphone Warehouse will carve the business into two: a Distribution division, embracing its mobile phone stores and fixed-line business outside the UK, and a UK fixed-line division.
The group said revenues at its Distribution unit will rise by between 11-13 pct in the current year, with the profit margin improving by about 70-80 basis points year-on-year to approximately 6.5 pct.
At the fixed-line unit, turnover is forecast to jump by 45 pct, with margins expanding to around 7 pct from 1.5 pct currently.
Capital expenditure for the current year, ending in March 2008, will be 220 mln stg, reflecting the expansion into the US and the spiraling cost of building up its UK broadband business, added the group.
