Carphone chief warns tough times ahead

CARPHONE Warehouse will comfortably hit the City's best expectations for the year just ended with profits topping £102m against the £76m made a year before.

But chief executive Charles Dunstone is cautious about the coming year, warning that like-for-like profits from its UK stores may be broadly flat.

He said: 'The existing stores are so packed with customers that it is physically impossible to get likefor-like growth out of them.

'We are opening 250 stores this year with 100 in the UK. But clearly there is some pretty bad news coming out of the High Street which we are not completely immune from and, to an extent, we are at the mercy of the networks and how hard they push 3G.'

Dunstone said he may be being overcautious, pointing out that analysts upgraded their numbers three times in the last financial year. While 60% of profits comes from recurring revenues like subscriptions, insurance, TalkTalk and Opal, he admits retail 'is the bit that drives the rest'.

Carphone has upped its target for its fixed-line service TalkTalk from its current 920,000 customers to two million in the UK in three years' time.

Dunstone believes there could be a significant upturn in demand for 3G in the second half in the run-up to Christmas. 'We are not assuming that in our guidance today. Hutchison is still the only company really pushing 3G across Europe.

'But if operators are subsidising new customers to the tune of £300 it has to makes sense for them to push their new technology rather than legacy systems.'

HANS SNOOK, icon of the mobile phone industry, is stepping down as chairman of Carphone Warehouse at July's annual meeting after three years at the helm.

He will be replaced by former Tesco director John Gildersleeve, who has been a non-executive director since 2000 and is chairman of Gallaher.

Snook, 56, closed the ailing Rabbit network in the UK and turned it into the highly successful Orange for his bosses at Hutchsion Whampoa. When that was sold to France Telecom in 2000 he trousered the thick end of £40 million.

He then went big into alternative medicine, sinking £1.5 million into his London Diagnostic Clinic and more into ventures in Thailand where he remains chairman of Orange just in that country.

Carphone is his last link with UK plc and despite having been shortlisted for the chairmanship of Channel 4 there are no hints that he plans to pop up on another big board shortly.