Carphone Warehouse hit by pre-pay shortfall

Carphone Warehouse has suffered tumbling pre-paid revenues during the consumer downturn, which hit its third-quarter underlying sales by nearly 5%.

But the mobile phones specialist benefited from a rise in long-term contract volumes, amid strong demand for the latest smartphones, and its Virgin Mobile France division delivered a 15% leap in revenues.

This could not offset a slump of between 35% and 40% in the pre-pay market, which resulted in Carphone Warehouse Europe's like-for-like revenues tumbling by 4.7% over the three months to 31 December, below City expectations.

Its pre-pay sales were hit by more consumers moving on to monthly, or longer 18 to 24-month contracts, a dearth of smartphones in the low-end pre-pay market and cash-strapped shoppers cutting back on purchases of new pay-as-you-go phones.

Total revenues at Carphone, which has closed its 11 Best Buy UK shops at a post-tax cost of up to £75 million, fell 4.2% to £990 million. But it expects its full-year profits to be line with guidance.