January 24, 2013 / 8:56 AM / 5 years ago

UPDATE 1-Carphone sales rise offset by margin fall

* CPW Europe Q3 lfl revenue up 7.8 pct vs f‘cst up 4 pct

* CEO sees CPW Europe year margin down 2 percentage points

* Group EPS guidance of 11.5-13.0 pence reiterated

* Shares up 0.5 pct

LONDON, Jan 24 (Reuters) - Carphone Warehouse, Europe’s biggest independent mobile phone retailer, beat sales growth forecasts at its main CPW Europe business, with strong demand for smartphones and tablets in Britain more than offsetting weakness in France.

But despite the strong showing the firm said on Thursday it would not be changing earnings guidance for the 2012-13 year as it had cut prices and offered deals to drive revenue.

Chief Executive Roger Taylor told Reuters CPW Europe’s profit margins would be down about 2 percentage points over the full-year, mirroring the first-half fall.

Sales at CPW Europe stores open over a year rose 7.8 percent in the three months to Dec. 31, Carphone’s fiscal third quarter.

That compared with analysts’ consensus forecast for a like-for-like rise of 4 percent, according to a company poll, and a 5 percent rise in the second quarter.

Shares in Carphone, up 35 percent over the last three months, were up 0.5 percent at 220.5 pence at 0840 GMT, valuing the business at 1.04 billion pounds ($1.65 billion).

UK like-for-like revenue was up 16 percent but flat in mainland Europe, with France “particularly challenging”.

Many European retailers are suffering as rising prices, meagre wages growth, government austerity measures and worries about the euro zone debt crisis hurt consumers.

UK growth was driven by the postpay segment with the prepay market remaining weak.

Taylor said top sellers in the high end smartphone category were Apple’s iPhone 5 and Samsung’s Galaxy S3. He said the firm also sold “hundreds of thousands” of tablets, taking about 8 percent of the tablet market in the UK.

Last week Dixons Retail and Home Retail’s Argos called out strong sales of tablets at Christmas.

Non-cellular revenue represented 9 percent of CPW Europe’s revenue in the third quarter. The firm has a medium term aspiration to get that figure to 15 percent.

Carphone’s Virgin Mobile France (VMF) joint venture posted revenue growth of 9.9 percent on a constant currency basis.

Carphone reiterated EPS guidance for the 2012-13 year at 11.5-13.0 pence, with a narrowed range for headline earnings before interest and tax (EBIT) of 135-145 million pounds for CPW Europe.

Overall third quarter revenue rose 14.5 percent to 1.09 billion pounds.

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