The launch of US electricals giant Best Buy in the UK grabbed the headlines this week, but it was also parent company Carphone Warehouse’s first trading update since its demerger last month.
In a fourth-quarter trading update which also gave indicative full-year figures in place of full preliminary results, the retailer said full-year EBIT for Carphone Warehouse Europe soared 18% to £114m, while its US joint venture Best Buy Mobile experienced a “transformational year” with Carphone’s profit share growing from £8m to £46m in the year.
The company made a loss of £21m on the launch of Best Buy in Europe and anticipates losing £40m to £45m on the venture next year as it invests in setting up the UK business.
Buy, said UBS analyst Andy Hughes, who said that the strong performance in the core Carphone business and in the US and France would more than offset the losses from the Best Buy roll-out.
Carpetright continued to strike a cautious note despite fourth-quarter sales rising 4.9%. UK and Ireland like-for-likes were up 1.5% in the 12-week period to April 24, and chairman Lord Harris warned that the recovery in the UK market was proving slower than expected.
Investec analyst Natalia Marisova put her hold recommendation under review, and was concerned that the insurance and housebulding tie-ups were taking longer than expected to bear fruit, meaning profit forecasts were looking risky.
Home shopping group Findel gave a year-end trading update and warned that profits would come in below expectations at between £16m and £17.5m.
The retailer said sales from continuing operations came in at £582m - a 1% increase on the previous year - but a good performance from home shopping was cancelled out by a poor showing from its educational supplies arm.
The latest grocery sector data from Kantar Worldpanel showed overall growth remained subdued, but all three quoted grocers outperformed the market with Asda continuing to lose out.
Tesco was the big winner and increased its market share from 30.3% to 30.5%. Bernstein rates the shares outperform, describing the performance as “reassuring given a slightly disappointing performance by Tesco in March.”
As it continues to struggle in the market share charts Asda launched a new price offensive claiming to guarantee it is the cheapest grocer. Analyst Collins Stewart warned that Sainsbury’s has most to lose from Asda’s campaign, because it has the lowest operating margin at 3.3%.
Moss Bros announced a new chairman. Debbie Hewitt has been on the board since last June and has been acting as interim chairman since March.