Carphone Warehouse Profit Forecast: Best Buy Boost

For the third quarter in a row, the UK retailer Carphone Warehouse has improved its profit forecast despite sales falling at its European business.

The raise by Carphone Warehouse of their full-year earnings guidance is due to an expectation that a profit-sharing agreement with Best Buy in America, will generate them up to £100m after another strong trading quarter.

The Carphone Warehouse’s European business saw a decline by 1.7% in similar sales to the previous year’s fourth quarter. The group said that an increase in the number of customers moving to 2-year contracts instead of signing up for just one year, resulted in fewer connections and therefore, an 8.8% drop to 2.6 million.

As indictaed in an article by Peter Cripps of Belfast Telegraph, the sale of smartphones and ‘tablet’ computers, is likely to give a boost to the operating profits of Carphone Warehouse’s European business by between 15% and 20% in the full-year.

Best Buy (the mobile phone retailing business in the US) saw a growth to their connections of 25.9% to 1.8 million in the quarter after new stores were opened. In the year to the end of March, the business is expected to reach the top end of their previous guidance profits of between £90m and £100m.

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