Carphone Warehouse Europe like-for-likes dropped 5.5% in the 13 weeks to March 31.
The mobile phone retailer said it expects full year profits to be in line with guidance despite a challenging market including the shift from 18 to 24 month contracts.
Carphone Warehouse chief executive Roger Taylor said: “As the shift from 18 to 24 month contracts completes, we are starting to enjoy material benefits from our new contract terms with the network operators. We are also seeing continued payback from our investment in the roll-out of our Wireless World store format, as well as continued momentum in non-cellular product categories where we see real opportunity. “
The retailer said the large majority of its UK stores will move to its new Wireless World format in the next two to three years.
It grew postpay volumes in the UK over the period and said its price promise had helped it gain share in the upgrade segment. However, it said there was “continued weakness” in prepay and estimated the overall market was down 30 to 40% over the quarter.
Taylor said: “Although the prepay market remains weak, we have some reason to be more optimistic about the increasing presence of smartphones in this segment in the year ahead.”
The group said it is focusing on scale, structure and strong cost control to help it mitigate the tough conditions in some of its mainland European markets.
The retailer is to further develop its non-cellular ‘connected world’ offering, which includes tablets , accessories and applications. The category is currently a small part of overall revenue but Carphone Warehouse said its growth potential is “significant”.
It launched its App-cessory range of smartphone and tablet accessories that work specifically with apps last month online and in selected stores. It plans to roll this out to a further 150 stores across the UK by the summer.
The retailer said: “The benefit of our positioning in the ‘connected world’, the continued focus on our newly designed store format, a wider product service proposition and strong relationshops with network partners, mean we face the future in robust shape.”