Carphone Warehouse has announced strong results for the 2006/07 financial year.
With its TalkTalk broadband service grabbing the headlines, many commentators have overlooked the strong performance from the group’s core retail division – achieving total retail revenue growth of 20.9% and like-for-likes of 6.6%. Despite focusing its attention on the debacle surrounding the launch of TalkTalk’s free broadband service, Carphone Warehouse has expanded its retail business aggressively, opening 444 new stores in the year, including 100 in the UK.
More importantly, the publicity and embarrassment surrounding the launch of the broadband service – which left many consumers frustrated by poor call center service and long-delays in getting connected – seems not to have dented the company’s brand. Although diversification into new markets can often spread risk, there is the chance that a failed move can damage the wider business and adversely affect its other operations. Carphone Warehouse arguably escaped narrowly.
The company has also managed to grow its retail operations despite losing the right to sell Vodafone contracted mobiles in the UK and has improved subscription connections by an impressive 17.3% to 4.0 million. This highlights the potency of its retail offer and its successful positioning in today’s crowded market. Having marketed itself on offering ‘impartial advice’ many believed that the loss of the Vodafone contract would have seriously hindered its ability to continue with this strategy – a potential weakness that Carphone Warehouse has clearly managed.
While the group’s retail operations still form the core of its business, the past 12 months have been a period of further transformation for the business – moving away from a primarily retail-based group to one of the UK’s leading communications providers. However, while it has built solid foundations for future growth both in the UK and abroad, it will be the company’s ability to continue driving growth through its core retail operations – capitalizing on faster replacement cycles and new products to market – in the short term at least, while expanding into new regions and sectors that will ensure its future success.
Source: Verdict Research
