Carphone Warehouse today reported a 16% surge in third quarter like-for-like sales as shoppers stocked up on tablets for Christmas. Retail Week takes a look at how the business has been rebalanced.
If tablets were shoppers’ must-have Christmas gift in 2012, margin growth will be on retailers’ wish lists for 2013.
Dixons boss Seb James said that tablet sales, which were “phenomenal” at the Currys and PC World operator, as well as Argos, over Christmas had “impacted overall headline margins” because shoppers bought more accessories when purchasing laptops.
Carphone Warehouse chief executive Roger Taylor said that the retailer sold 40,000 tablets a week in the run up to Christmas, up from 5,000 a week the previous year.
He said the mobile specialist had become a “real authority in tablets” and its strategy to rebalance the business to include sales of “non-cellular” products is on track.
Taylor says: “We substantially grew market share in both prepay and postpay and gained authority in tablets. This reflects extremely well on our team and on our policy of investing in our proposition to give our customers compelling offers on smartphones and tablets, accepting some margin investment.”
However, independent analyst Nick Bubb believes that authority in the tablet market against the likes of Dixons, Argos and Apple will be hard to truly establish. “Will the likes of HMV and Carphone Warehouse really be recognised as tablet specialists?
“That said, people will trust Carphone to give them good advice.”
James expects laptop sales to pick up in the early months of the year and Bubb agrees that while tablets are a good gift, conducting work functions such as running an Excel document on one is impractical. After the administration of Jessops earlier this month, electricals specialists will be keeping a close eye on their margins.
Realistically, margin on tablets is just one of a number of issues Carphone has to face, most notably its flat sales in Europe held back by weak sales in France where the mobile phone market has been driven down on price and Taylor believes is unlikely to return to growth. The company is targeting break even in the French market this year.
Moreover, speculation continues that Carphone will buy Best Buy out of its share of its European joint venture after the US retailer pulled out of the UK in 2011. It also faces stiff competition in its traditional market with the rebranded EE fighting for further market share.
The 800-store phone specialist remains a company in transition but by gearing itself beyond just phones it has strong prospects for sustained growth.
No comments yet