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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
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] 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 Loading... ()] and supermarket group Morrison [MRW-LN Loading... ()] said on Tuesday they would beat profit forecasts, while home improvements group Kingfisher [KGF-LN Loading... ()] 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
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], were 773 million pounds, up 6 percent year-on-year, or up 0.7 percent on a constant currency basis.
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Sharon Lorimer |
"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
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] 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.
Data is a real-time snapshot *Data is delayed at least 15 minutes